Consumers in the U.S. are increasingly hesitant to purchase sodas, influenced by the popularity of weight loss medications and non-alcoholic alternatives. Despite this trend, Coca-Cola reported a strong performance in its second-quarter earnings, which were bolstered by robust global demand for its beverage offerings. Following the positive results, the company has raised its full-year revenue expectations.
CEO James Quincey expressed satisfaction with the quarter’s outcomes, highlighting significant growth in both top line and operating income amidst a shifting market landscape. However, Coca-Cola experienced a 1% decline in volume sales in North America during the same period. Quincey attributed this drop to decreased sales in “away-from-home channels,” which encompass their products in restaurants and cafes.
The drop in sales volume was somewhat mitigated by the success of the Fairlife milk brand and strong retail sales growth of Coca-Cola itself, which ranked first and second in those categories, respectively. To counteract the sales decline, Coca-Cola is collaborating with food chains to incorporate its beverages into meal deals, including a partnership with McDonald’s aimed at enhancing the value of its $5 meal deal, which includes a soft drink.
In terms of financial performance, Coca-Cola exceeded Wall Street’s expectations with second-quarter revenues reaching $12.4 billion, translating to earnings of approximately $0.84 per share. Analysts had predicted revenues of about $11.76 billion, or around $0.81 per share. The company now anticipates organic revenue growth of between 9% and 10%, a revision from its earlier estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in capturing the interest of U.S. consumers, who are leaning toward healthier products and weight loss options. The company cited product recalls as a reason for its lackluster second-quarter performance.