Consumers in the U.S. are increasingly turning to weight loss drugs and non-alcoholic beverages, which has led to a slowdown in soda sales. Despite this trend, Coca-Cola reported strong earnings for the second quarter, fueled by high global demand for its beverage lineup and prompting the company to revise its annual forecast upwards.
Coca-Cola CEO James Quincey expressed optimism about the company’s second-quarter performance, noting solid growth in both revenue and operating income amid shifting market conditions. However, the company did experience a 1% decline in volume sales in North America during the quarter. Quincey attributed this decline to decreased demand in “away-from-home channels,” which encompass a variety of beverages, including soda, water, sports drinks, and coffee.
Coca-Cola’s dip in volume was somewhat counterbalanced by strong sales of its Fairlife milk brand and notable growth in its signature soda, Coca-Cola, which ranked highly in retail sales during the period. To address the sales decline, Quincey mentioned efforts to collaborate with fast-food chains to integrate Coca-Cola products into combo meals, including support for McDonald’s in enhancing its $5 meal deal that features a soft drink.
The company surpassed Wall Street estimates, with revenue reaching $12.4 billion for the second quarter, translating to around $0.84 per share. Analysts had expected Coca-Cola to report revenue of approximately $11.76 billion, around $0.81 per share. In light of these results, Coca-Cola has raised its forecast for organic revenue growth to between 9% and 10%, up from a previous estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in attracting American consumers, who are increasingly prioritizing weight loss and healthier options. Earlier in July, Pepsi attributed its disappointing second-quarter results to a series of product recalls.