Consumers in the U.S. are shifting away from sodas, influenced by the popularity of weight loss medications and non-alcoholic beverage options. Despite this trend, Coca-Cola reported strong earnings for the second quarter of the year, buoyed by a solid global demand for its beverages, which led the company to increase its full-year outlook.
Coca-Cola’s CEO, James Quincey, expressed optimism about the results, highlighting the company’s solid growth in revenue and operating income amid a changing market landscape. However, in North America, volume sales saw a slight decline of 1% for the quarter. Quincey attributed this drop to reduced sales in out-of-home channels, which encompass categories such as water, sports drinks, coffee, tea, and soda.
The downturn was partially counterbalanced by the success of Coca-Cola’s Fairlife milk product and its flagship soda, Coke, which ranked first and second in terms of retail sales growth for the quarter. To address the decline in soda sales, Coca-Cola is collaborating with food chains to incorporate its beverages into meal combos. The company is reportedly partnering with McDonald’s to enhance its $5 meal deal, which features a soft drink.
Overall, Coca-Cola surpassed Wall Street’s expectations by achieving $12.4 billion in revenue for the second quarter, translating to approximately $0.84 per share. Analysts had projected a revenue figure of around $11.76 billion, or $0.81 per share.
Looking forward, Coca-Cola has raised its forecast for organic revenue growth to a range of 9% to 10%, an increase from its previous estimate of 8% to 9%.
Pepsi, on the other hand, is facing similar challenges as it strives to attract U.S. consumers who are increasingly focused on health and weight loss. The company reported a subdued performance in its second quarter, attributing some of its struggles to a series of product recalls.