Consumers in the U.S. are increasingly opting for weight loss medications and non-alcoholic alternatives, leading to a decline in soda purchases. Despite this trend, Coca-Cola reported strong second-quarter earnings, buoyed by solid global demand for its beverages, which prompted the company to revise its full-year expectations upward.
Coca-Cola’s CEO, James Quincey, expressed optimism about the company’s performance, highlighting significant growth in both revenue and operating income amid changing market conditions. However, the company did experience a 1% drop in volume sales in North America, attributed to reduced activity in out-of-home channels like water, sports drinks, coffee, tea, and sodas.
This decline was partly offset by the success of its Fairlife milk brand and strong sales of Coca-Cola itself, which ranked first and second in retail sales growth for the quarter. To counter the downturn, Quincey revealed that Coca-Cola is collaborating with restaurant chains to integrate its sodas into combo meal offerings. Notably, they are working with McDonald’s to enhance its $5 meal deal that includes a soft drink.
Coca-Cola’s second-quarter revenue reached $12.4 billion, surpassing Wall Street’s expectations of $11.76 billion. The company is now projecting organic revenue growth of 9% to 10%, an increase from the previous estimate of 8% to 9%.
Pepsi is facing similar challenges in the U.S. market, as consumers increasingly favor products geared towards health and weight management. In early July, Pepsi attributed its lackluster second quarter to a series of product recalls that affected its performance.