Recent trends in weight loss medications and non-alcoholic beverages are influencing consumer behavior, leading many in the U.S. to reduce their soda purchases. Despite these trends, Coca-Cola reported strong earnings for the second quarter, driven by global demand for its products, prompting the company to increase its full-year projections.
Coca-Cola CEO James Quincey expressed optimism about the company’s performance, highlighting solid revenue and operating income growth despite a shifting market landscape. However, the company did see a 1% decline in volume sales in North America during the quarter, attributed to decreased demand in away-from-home channels, which include beverages sold outside of home settings, such as sports drinks, coffee, tea, and sodas.
The volume decrease was somewhat mitigated by the success of Fairlife milk and its popular soda offerings, with Coca-Cola and Diet Coke ranking highly in retail sales growth during this period. To counter the decline, Coca-Cola is collaborating with fast-food chains to integrate sodas into combo meal deals, specifically working with McDonald’s to enhance its $5 meal offerings that include a soft drink.
Overall, Coca-Cola exceeded Wall Street’s expectations with second-quarter revenues of $12.4 billion, equating to approximately $0.84 per share, surpassing the anticipated $11.76 billion, or about $0.81 per share, as projected by FactSet. The company now forecasts organic revenue growth of 9% to 10%, an increase from its previous estimate of 8% to 9%.
In a similar vein, Pepsi has also faced challenges in attracting U.S. consumers who are increasingly favoring products aligned with health and weight loss. Earlier this month, Pepsi cited a series of product recalls as factors contributing to its less than stellar second-quarter performance.