In the United States, the rise of weight loss drugs and non-alcoholic options is causing a shift in consumer preferences, leading to reduced soda purchases. However, Coca-Cola reported solid second-quarter earnings, bolstered by strong global demand for its beverages, prompting the company to raise its full-year forecast.
Coca-Cola’s CEO, James Quincey, expressed optimism about the company’s performance, stating that the second quarter showed significant growth in revenue and operating income despite a challenging market. Nonetheless, the company experienced a 1% decline in volume sales in North America, which Quincey attributed to weaker sales in away-from-home channels that encompass water, sports drinks, coffee, tea, and soda.
To mitigate this decline, Coca-Cola’s Fairlife milk line and its flagship soda, Coke, countered the downturn, with Coke ranking first and second in retail sales growth during the quarter. Quincey noted that Coca-Cola is collaborating with fast-food chains to include its sodas in combo meals, specifically mentioning a partnership with McDonald’s to enhance its $5 meal deal that comes with a soft drink.
Coca-Cola’s performance exceeded analysts’ expectations, reporting $12.4 billion in revenue for the second quarter, translating to earnings of approximately $0.84 per share. This surpassed the market’s forecast of $11.76 billion in revenue, or around $0.81 per share.
Looking ahead, Coca-Cola anticipates organic revenue growth of 9% to 10%, revising its earlier estimate of 8% to 9%. In parallel, Pepsi is facing similar challenges as U.S. consumers increasingly gravitate towards weight-loss-focused products and healthier options. Earlier in July, Pepsi cited a series of product recalls as a factor in its underwhelming second-quarter performance.