Consumers in the U.S. are increasingly opting for weight loss medications and non-alcoholic alternatives, leading to a slowdown in soda purchases. Despite this trend, Coca-Cola reported strong earnings for the second quarter, buoyed by global demand for its beverages, which allowed the company to raise its annual outlook. CEO James Quincey expressed optimism regarding the company’s performance, noting “solid topline and operating income growth in an ever-changing landscape.”
However, Coca-Cola experienced a 1% decline in volume sales in North America during the quarter, which Quincey attributed to decreased sales in “away-from-home channels” such as water, sports drinks, coffee, tea, and soda. This decline was partially mitigated by strong sales of Fairlife milk and Coca-Cola soda, both of which ranked highly in retail sales growth.
To counteract the volume drops, Coca-Cola is collaborating with food chains to integrate its sodas into combo meals, including initiatives with McDonald’s to enhance the fast food chain’s $5 meal deal that includes a soft drink.
Overall, Coca-Cola exceeded market expectations with second-quarter revenues of $12.4 billion, translating to earnings of around $0.84 per share, surpassing analysts’ predictions of $11.76 billion in revenue and earnings of approximately $0.81 per share. The company has adjusted its forecast for organic revenue growth to a range of 9% to 10%, an increase from the previous estimate of 8% to 9%.
Similarly, Pepsi has faced challenges in engaging U.S. consumers who are leaning more towards weight management and healthier lifestyle choices. The company’s struggles were amplified by several product recalls, which they reported as a factor in their lackluster performance in the second quarter.