Consumers in the U.S. are increasingly avoiding sodas, influenced by the popularity of weight loss medications and non-alcoholic alternatives. Despite this trend, Coca-Cola reported strong earnings for the second quarter, mainly thanks to solid global demand for its beverages. As a result, the company raised its full-year financial outlook.
Coca-Cola’s CEO, James Quincey, expressed optimism about the company’s second-quarter performance, highlighting both revenue and operating income growth amidst a shifting market landscape. However, he noted a 1% decline in volume sales in North America, attributing this drop to a weakening in “away-from-home channels,” which encompass water, sports drinks, coffee, tea, and soda products.
The decline in sales was partly mitigated by the success of Fairlife milk and Coca-Cola itself, which ranked first and second in retail sales growth for the quarter. To counteract the drop in soda purchases, Coca-Cola is collaborating with fast-food chains to integrate its sodas into combo meal deals, with plans to assist McDonald’s in enhancing its $5 meal offer that includes a soft drink.
Coca-Cola outperformed Wall Street’s expectations with $12.4 billion in revenue for the quarter, translating to approximately $0.84 per share, surpassing the forecast of $11.76 billion and $0.81 per share.
The company has now adjusted its forecast for organic revenue growth to between 9% and 10%, an increase from its earlier estimate of 8% to 9%.
Similarly, Pepsi has faced challenges in capturing the attention of U.S. consumers, who are increasingly gravitating towards healthier options, including weight loss products. In early July, Pepsi attributed its lackluster second-quarter performance to a series of product recalls.