In the U.S., the rise of weight loss medications and non-alcoholic drink options has led consumers to hold back on purchasing sodas. Despite this trend, Coca-Cola reported strong second-quarter earnings, driven largely by robust global demand for its products, leading the company to enhance its full-year financial outlook.
Coca-Cola CEO James Quincey expressed optimism about the results, highlighting solid revenue and operating income growth in a changing market. However, the company did experience a 1% decline in volume sales in North America during the quarter. Quincey attributed this drop to reduced sales in “away-from-home channels,” which encompasses water, sports drinks, coffee, tea, and soda.
The sales dip was somewhat mitigated by the performance of Fairlife milk and strong retail sales for Coca-Cola’s soft drinks, which ranked first and second in growth during the quarter. To counterbalance the sales decline, Quincey mentioned that Coca-Cola is collaborating with food chains to incorporate its sodas into combo meals. The company is reportedly partnering with McDonald’s to enhance the appeal of the fast food chain’s $5 meal deal that includes a soft drink.
Overall, Coca-Cola exceeded Wall Street expectations with second-quarter revenue of $12.4 billion, translating to earnings of $0.84 per share. This performance surpassed analysts’ forecasts, which estimated revenue at $11.76 billion, or approximately $0.81 per share.
Coca-Cola has raised its forecast for organic revenue growth to between 9% and 10%, an increase from its previous predictions of 8% to 9%. Meanwhile, Pepsi is also facing challenges in attracting U.S. consumers, who are increasingly favoring products focused on weight loss and healthier lifestyles. A Gallup poll indicated that young adults in the U.S. are consuming significantly less alcohol than in previous years. In July, Pepsi attributed its lackluster second-quarter results to multiple product recalls.