Consumers in the U.S. are increasingly delaying soda purchases, influenced by the rise of weight loss medications and non-alcoholic alternatives.
Despite these trends, Coca-Cola reported strong second-quarter earnings, fueled by robust global demand for its beverages, leading the company to enhance its full-year forecasts. CEO James Quincey expressed optimism about the company’s performance, highlighting significant growth in both revenue and operating income amidst evolving market conditions.
However, Coca-Cola experienced a slight volume sales decrease of 1% in North America during the quarter. Quincey attributed this decline to reduced sales in “away-from-home channels,” which encompass water, sports drinks, coffee, tea, and soda options. The decline was somewhat countered by the success of Fairlife milk and Coca-Cola itself, which ranked highly in retail sales growth for the period.
To navigate the downturn, Coca-Cola is partnering with fast-food chains, including McDonald’s, to incorporate its beverages into combo meals, particularly focusing on enhancing the appeal of the $5 meal deal that includes a soft drink.
Coca-Cola surpassed Wall Street expectations, reporting $12.4 billion in revenue for the second quarter, translating to approximately $0.84 per share. Analysts had predicted revenue of $11.76 billion, or about $0.81 per share. The company has adjusted its forecast for organic revenue growth to a range of 9% to 10%, up from a previous estimate of 8% to 9%.
Pepsi, like Coca-Cola, is facing challenges in engaging U.S. consumers, who are increasingly gravitating toward products that emphasize weight loss and healthier choices. Earlier in July, Pepsi attributed a lackluster performance in its second quarter to a series of product recalls.