Consumers in the U.S. are increasingly opting for weight loss drugs and non-alcoholic beverages, which is impacting soda sales. Despite this trend, Coca-Cola reported strong second-quarter earnings, bolstered by global demand for its products, leading the company to raise its full-year sales outlook.
Coca-Cola CEO James Quincey expressed optimism about the company’s performance, stating, “We are encouraged with our second-quarter results, which delivered solid topline and operating income growth in an ever-changing landscape.”
However, the company’s volume sales in North America experienced a 1% decline during the quarter. Quincey mentioned that this downturn was influenced by “softness in away-from-home channels,” which includes water, sports drinks, coffee, tea, and soda products. Despite the decline, Coke’s Fairlife milk and its namesake soda performed well, ranking first and second in retail sales growth for the quarter.
To counterbalance the decrease in sales, Coca-Cola is collaborating with food chains to incorporate its products into combo meals. Notably, the company is reportedly working with McDonald’s to enhance its $5 meal deal that includes a soft drink.
Coca-Cola’s performance exceeded Wall Street’s forecasts, reporting $12.4 billion in revenue for the second quarter, which translates to approximately $0.84 per share. Analysts had anticipated revenue of about $11.76 billion or roughly $0.81 per share.
In light of its strong results, Coca-Cola has adjusted its forecast for organic revenue growth to between 9% and 10%, an increase from its previous estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in attracting U.S. consumers who are leaning more towards products prioritizing health and weight management. A recent Gallup poll indicated a significant decrease in alcohol consumption among young adults in the U.S. Earlier this month, Pepsi attributed a weaker performance in its second quarter to a series of product recalls.