Weight loss medications and non-alcoholic beverage choices are leading consumers in the U.S. to reduce their soda purchases.
Despite this trend, Coca-Cola reported strong second-quarter earnings, attributed to healthy global demand for its beverages, which enabled the company to raise its full-year projections. Coca-Cola’s CEO, James Quincey, expressed optimism about the second-quarter performance, highlighting solid growth in both revenue and operating income amid a challenging environment.
However, the company indicated a 1% decline in volume sales in North America for the quarter. Quincey noted that the decrease in the U.S. market was linked to weaker performance in “away-from-home channels,” affecting sales of water, sports drinks, coffee, tea, and sodas.
This decline was somewhat mitigated by successful sales of Fairlife milk and Coca-Cola itself, which saw significant growth in retail sales during the quarter. To combat the sales drop, Coca-Cola is collaborating with food chains to include its sodas in combo meal offerings. Reports suggest that they are particularly working with McDonald’s to enhance the appeal of its $5 meal deal, which features a soft drink.
Coca-Cola’s performance exceeded Wall Street expectations, generating $12.4 billion in revenue for the second quarter, translating to around $0.84 per share. Analysts had predicted revenues of approximately $11.76 billion, or around $0.81 per share. The company has now adjusted its forecast for organic revenue growth to between 9% and 10%, up from a previous estimate of 8% to 9%.
Similarly, Pepsi has encountered difficulties attracting U.S. customers, who are increasingly selecting products that align with weight loss and healthier lifestyles. Furthermore, in early July, Pepsi attributed its lackluster second-quarter performance to a series of product recalls.