Consumer interest in weight loss drugs and non-alcoholic beverages is impacting soda sales in the U.S. market.
Despite these trends, Coca-Cola reported strong earnings for the second quarter, benefiting from robust global demand for its beverages. The company has raised its full-year guidance in light of these results.
Coca-Cola’s CEO, James Quincey, expressed optimism about the company’s performance, citing solid top-line growth and improved operating income amid a shifting market landscape.
However, in North America, Coca-Cola experienced a 1% decline in volume sales during the quarter. Quincey noted that this dip was largely due to weaker sales in locations outside the home, which includes categories like water, sports drinks, coffee, tea, and sodas.
The decrease was somewhat mitigated by strong sales from Coca-Cola’s Fairlife milk and its flagship soda, which ranked highly in retail sales growth.
To counter the volume drop, Coca-Cola is collaborating with food chains to integrate its products into combo meals. The company is reportedly in discussions with McDonald’s to enhance the value of its $5 meal combo that includes a soft drink.
Overall, Coca-Cola exceeded Wall Street’s expectations, reporting $12.4 billion in revenue for the second quarter, translating to about $0.84 per share. Analysts had anticipated revenues of $11.76 billion at approximately $0.81 per share.
The company has now adjusted its forecast for organic revenue growth to between 9% and 10%, surpassing its earlier estimate of 8% to 9%.
Similar to Coca-Cola, Pepsi is facing challenges in capturing the attention of U.S. consumers, who are increasingly leaning towards weight-loss-focused and healthier alternatives. Early in July, Pepsi attributed its modest second-quarter performance to a series of product recalls.