Weight loss medications and healthier beverage options have led consumers in the U.S. to reduce their soda purchases.
Despite this trend, Coca-Cola reported strong earnings for the second quarter, bolstered by robust global demand for its products, prompting the company to enhance its full-year forecast.
CEO James Quincey remarked on the encouraging performance, highlighting significant growth in both revenue and operating income amid a dynamic market environment.
In North America, however, Coca-Cola saw a 1% decline in volume sales during the quarter. Quincey noted that this drop was largely due to reduced sales in “away-from-home channels,” which encompass its water, sports drinks, coffee, tea, and soda offerings.
The decline in sales was somewhat mitigated by the success of its Fairlife milk brand and its signature soda, Coke, which emerged as leaders in retail sales growth for the quarter.
To combat the sales downturn, Quincey mentioned that Coca-Cola is collaborating with food chains to incorporate its sodas into combo meals. The company is reportedly assisting McDonald’s in revitalizing its $5 meal deal that features a soft drink.
Overall, Coca-Cola exceeded Wall Street’s expectations, generating $12.4 billion in revenue for the second quarter, equating to approximately $0.84 per share. Analysts had predicted the company would achieve $11.76 billion in revenue, or around $0.81 per share, according to FactSet.
The company has now revised its forecast for organic revenue growth to between 9% and 10%, an increase from its previous estimate of 8% to 9%.
Pepsi, like Coca-Cola, is facing challenges in attracting U.S. consumers who are increasingly favoring health-focused products. Recently, Pepsi attributed its lackluster second quarter to a series of product recalls.