Weight loss medications and non-alcoholic beverages have led to a decline in soda consumption in the United States.
Despite this trend, Coca-Cola reported strong earnings for the second quarter, buoyed by robust global demand for its beverage products, prompting the company to raise its full-year revenue forecasts.
CEO James Quincey expressed optimism over the company’s performance, stating, “We are encouraged with our second-quarter results, which delivered 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. Quincey noted that this downturn was largely due to a decrease in sales from “away-from-home channels,” which encompass water, sports drinks, coffee, tea, and sodas.
The decline was somewhat mitigated by the success of its Fairlife milk range and its flagship product, Coke, which ranked first and second in retail sales growth within the quarter.
To address the sales drop, Quincey mentioned ongoing efforts to partner with food chains to include its sodas in combo meals, highlighting cooperation with McDonald’s to enhance the fast-food chain’s $5 meal deal that features a soft drink.
Overall, Coca-Cola surpassed Wall Street expectations, reporting $12.4 billion in revenue for the second quarter, translating to earnings of approximately $0.84 per share. Analysts had expected revenue of $11.76 billion and earnings of around $0.81 per share, according to FactSet.
The company now anticipates organic revenue growth of 9% to 10%, raising its earlier estimate of 8% to 9%.
Similarly, Pepsi has faced challenges in attracting U.S. consumers, who are increasingly opting for weight loss and healthier products. In July, the company cited a series of recalls as a factor contributing to its disappointing second-quarter performance.