Consumers in the U.S. are increasingly opting for weight loss medications and non-alcoholic alternatives, leading to a decline in soda purchases. Despite this trend, Coca-Cola reported strong second-quarter earnings, driven by robust global demand, which prompted the company to raise its full-year outlook.
Coca-Cola’s CEO, James Quincey, expressed optimism about the company’s performance, noting significant growth in both revenue and operating income against a shifting market landscape. However, the company faced a 1% decline in volume sales in North America, primarily attributed to decreased sales in “away-from-home channels,” which encompass beverages such as water, sports drinks, coffee, tea, and sodas.
The drop was somewhat mitigated by strong performance from its Fairlife milk brand and solid sales of Coke, which ranked first and second in retail sales growth for the quarter. To counter the decline in soda consumption, Coca-Cola is collaborating with fast-food chains to integrate its beverages into combo meal offers. Reports indicate the company is working with McDonald’s to enhance its $5 meal deal that includes a soft drink.
Overall, Coca-Cola exceeded Wall Street predictions, generating $12.4 billion in revenue, translating to approximately $0.84 per share. Analysts had anticipated revenues of around $11.76 billion, or about $0.81 per share. The company has since revised its forecast for organic revenue growth to between 9% and 10%, an increase from the previous estimate of 8% to 9%.
Pepsi is also facing challenges in attracting U.S. consumers who are turning towards healthier options and weight loss products. The company has pointed to a series of recalls as contributing factors to its subdued performance in the second quarter of the year.