Consumer preferences for weight loss medications and non-alcoholic beverages are impacting soda sales in the U.S. market.
Despite this trend, Coca-Cola reported strong earnings for the second quarter, with global demand for its carbonated drinks contributing to an increase in its full-year outlook. CEO James Quincey expressed optimism about the results, highlighting significant growth in revenue and operating income amidst a dynamic market environment.
In North America, however, Coca-Cola experienced a 1% decline in volume sales during the quarter. Quincey attributed this decrease to weakened performance in “away-from-home” channels, which encompass water, sports drinks, coffee, tea, and soda options. Nonetheless, the decline was somewhat mitigated by successful sales of Fairlife milk and Coke itself, which ranked highly in retail sales growth.
To combat the volume drop, Coca-Cola is partnering with fast-food chains to include its sodas in combo meals, specifically collaborating with McDonald’s to enhance the popularity of its $5 meal deal that features a soft drink.
Overall, Coca-Cola surpassed Wall Street expectations, posting $12.4 billion in revenue and earnings of approximately $0.84 per share, exceeding predictions of $11.76 billion in revenue and $0.81 per share. The company has adjusted its forecast for organic revenue growth to between 9% and 10%, up from the previous estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in the U.S. market as health-conscious consumers gravitate toward weight loss products and non-alcoholic alternatives. Pepsi recently cited a series of product recalls as a catalyst for its lackluster performance in the second quarter.