In the U.S., consumers are increasingly avoiding sodas, influenced by the popularity of weight loss drugs and non-alcoholic alternatives. Despite this trend, Coca-Cola announced strong second-quarter earnings, fueled by solid global demand for its beverages, leading the company to raise its full-year outlook.
Coca-Cola’s CEO, James Quincey, expressed optimism about the company’s second-quarter performance, highlighting impressive top-line and operational income growth amid a shifting market landscape. However, the company experienced a 1% decline in volume sales in North America during the quarter. Quincey noted that this decrease was attributed to weaker sales in channels where consumers typically enjoy beverages away from home, which includes waters, sports drinks, coffees, teas, and sodas.
The dip in sales was somewhat balanced by the success of Fairlife milk and the Coca-Cola brand itself, which ranked as the top and second highest in retail sales growth, respectively. To counteract the downturn, Coca-Cola is collaborating with food chains to include its sodas in combo meal offerings, specifically partnering with McDonald’s to enhance the fast-food chain’s $5 meal deal that includes a soft drink.
Coca-Cola exceeded analysts’ expectations, reporting $12.4 billion in revenue and earnings of $0.84 per share in the second quarter, surpassing the anticipated $11.76 billion in revenue and $0.81 per share earnings according to FactSet data. The company has now adjusted its forecast for organic revenue growth to between 9% and 10%, up from earlier projections of 8% to 9%.
Similarly, Pepsi is facing challenges in appealing to U.S. consumers as they shift toward products that emphasize weight loss and healthier lifestyles. In early July, Pepsi pointed to a series of recalls as a factor in its underwhelming second-quarter performance.