Consumers in the U.S. are increasingly holding back on soda purchases due to the popularity of weight loss medications and non-alcoholic alternatives. However, Coca-Cola reported strong earnings for the second quarter, buoyed partly by robust global demand for its beverage products. As a result, the company has raised its full-year guidance.
Coca-Cola CEO James Quincey expressed optimism about the company’s second-quarter results, which showed solid growth in both revenue and operating income despite changes in consumer behavior. Nevertheless, the company experienced a 1% decline in volume sales in North America during the quarter. Quincey attributed this drop primarily to weaker sales in away-from-home channels, including options like water, sports drinks, coffee, tea, and traditional sodas.
This downturn was somewhat mitigated by strong sales of Fairlife milk and Coca-Cola itself, which ranked first and second in retail sales growth during the quarter. To combat falling sales, Coca-Cola is collaborating with food chains to integrate its sodas into combo meal deals, including initiatives with McDonald’s to enhance the fast food giant’s $5 meal offerings.
Despite the volume decline, Coca-Cola exceeded Wall Street’s expectations, reporting $12.4 billion in revenue and earnings of approximately $0.84 per share. Analysts had projected revenue around $11.76 billion, or roughly $0.81 per share.
The company also revised its forecast for organic revenue growth to a range of 9% to 10%, an increase from its prior estimate of 8% to 9%.
Pepsi, similarly, is facing challenges in capturing the attention of U.S. consumers as people shift towards products focused on weight loss and healthier choices. In early July, Pepsi attributed a lackluster second quarter to a series of product recalls.