Weight loss medications and non-alcoholic beverages are leading U.S. consumers to cut back on soda purchases. Despite this trend, Coca-Cola reported solid earnings for the second quarter, benefiting from strong global demand for its products and subsequently raising its full-year forecasts.
Coca-Cola’s CEO, James Quincey, expressed optimism about the company’s results, noting significant growth in revenue and operating income in a shifting market. However, the company did experience a 1% decline in volume sales in North America during the quarter. Quincey attributed this drop primarily to weaker sales in away-from-home channels, which encompass water, sports drinks, coffee, tea, and soda products.
This decline was somewhat mitigated by sales increases in Fairlife milk and its flagship soda, Coke, which ranked first and second in retail sales growth throughout the quarter. To counteract falling sales, Coca-Cola is collaborating with food chains to integrate its sodas into combo meal offerings. Reports suggest Coca-Cola is specifically assisting McDonald’s with its $5 meal deal that includes a soft drink.
Coca-Cola surpassed Wall Street’s expectations with second-quarter revenue of $12.4 billion, translating to about $0.84 per share, while analysts had anticipated around $11.76 billion in revenue, or approximately $0.81 per share. The company is now projecting organic revenue growth between 9% and 10%, increasing its prior guidance of 8% to 9%.
Pepsi is facing similar challenges, as U.S. consumers increasingly gravitate towards healthier options and weight loss products. In early July, Pepsi attributed its less-than-stellar second quarter to a series of product recalls.