Weight loss medications and non-alcoholic beverages are causing consumers in the U.S. to delay their soda purchases. Despite this trend, Coca-Cola reported strong earnings for the second quarter, fueled by robust global demand for its beverage offerings, leading the company to raise its full-year outlook.
Coca-Cola CEO James Quincey expressed optimism about the company’s quarterly results, highlighting solid growth in revenue and operating income amid a shifting market landscape.
However, the performance in North America wasn’t as strong, with volume sales dipping by 1% in the quarter. Quincey attributed the decline in the U.S. division to weakened sales in “away-from-home channels,” which encompass water, sports drinks, coffee, tea, and soda.
Coca-Cola noted that this decline was somewhat countered by its Fairlife milk products and its flagship soda, Coke, which ranked first and second in retail sales growth for the quarter.
To address the volume drop, Quincey mentioned that Coca-Cola is collaborating with food service chains to include its sodas in combo meals. Notably, the company is reportedly working with McDonald’s to enhance the fast-food chain’s $5 meal deal that features a soft drink.
Overall, Coca-Cola surpassed Wall Street’s predictions, reporting $12.4 billion in revenue for the second quarter, translating to about $0.84 per share. Analysts had projected revenue of $11.76 billion or approximately $0.81 per share.
The company has now adjusted its forecast for organic revenue growth to a range of 9% to 10%, increasing from the previous estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in the U.S. market as consumers increasingly gravitate toward products aimed at weight loss and healthier lifestyles. In early July, Pepsi cited a series of product recalls as a contributing factor to its weaker second-quarter performance.