Weight loss drugs and more non-alcoholic choices are leading consumers in the U.S. to cut back on soda purchases.
Despite this trend, Coca-Cola reported strong second-quarter earnings, buoyed by significant global demand for its beverages, prompting the company to revise its full-year guidance upward. CEO James Quincey expressed optimism about the results, noting they demonstrated solid growth in both revenue and operating income amid changing market conditions.
In North America, however, Coca-Cola experienced a 1% decline in volume sales. Quincey pointed out that this decrease was mainly due to reduced sales in “away-from-home channels,” which encompass their water, sports drinks, coffee, tea, and soda products.
The company found some relief in the performance of its Fairlife milk and its signature Coca-Cola brand, which ranked first and second in retail sales growth for the quarter. To counteract the decline in sales, Quincey mentioned that Coca-Cola is collaborating with food chains to incorporate its beverages into combo meals, specifically working with McDonald’s to enhance the value of its $5 meal deal, which includes a soft drink.
Overall, Coca-Cola exceeded Wall Street predictions, reporting $12.4 billion in revenue for the second quarter—equating to about $0.84 per share. Analysts had anticipated revenue of $11.76 billion, approximately $0.81 per share, according to FactSet.
The company has now adjusted its outlook for organic revenue growth to a range of 9% to 10%, up from the previous estimate of 8% to 9%.
Similarly, Pepsi has been facing challenges in engaging U.S. consumers who are increasingly leaning towards healthier lifestyles and weight loss solutions. In early July, Pepsi cited a series of product recalls as a factor in its lackluster second-quarter results.