Consumers in the U.S. are turning to weight loss drugs and non-alcoholic alternatives, leading to a decline in soda purchases. Despite this trend, Coca-Cola reported strong second-quarter earnings, bolstered by robust global demand for its beverages, which prompted the company to increase its full-year forecast.
Coca-Cola CEO James Quincey expressed optimism about the company’s performance, noting solid growth in both revenue and operating income in a shifting market. However, the company did experience a 1% drop in volume sales in North America during the quarter, mainly attributed to decreased activity in away-from-home channels, which encompass water, sports drinks, coffee, tea, and sodas.
This decline was somewhat mitigated by the success of Fairlife milk and Coca-Cola itself, with the latter achieving significant retail sales growth. To counteract decreasing soda sales, Quincey mentioned that Coca-Cola is collaborating with food chains, particularly McDonald’s, to incorporate its drinks into meal deals.
Coca-Cola exceeded Wall Street projections, reporting $12.4 billion in revenue, which translates to approximately $0.84 per share, surpassing the anticipated $11.76 billion and $0.81 per share. The company has revised its forecast for organic revenue growth to between 9% and 10%, up from an earlier estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in engaging U.S. consumers who are increasingly focused on healthier lifestyles. The company recently linked its underwhelming second-quarter performance to a series of product recalls.