Consumers in the U.S. are increasingly hesitant to purchase sodas, influenced by the availability of weight loss medications and non-alcoholic alternatives.
Despite this trend, Coca-Cola reported strong earnings for the second quarter, buoyed by global demand for its beverages, which led the company to raise its full-year forecasts. CEO James Quincey expressed optimism about the results, noting significant growth in both revenue and operating income in a changing market.
However, North American volume sales saw a 1% decline during the quarter. Quincey attributed this decrease to lower sales in away-from-home settings, which encompass water, sports drinks, coffee, tea, and sodas. This drop was somewhat balanced by the success of its Fairlife milk line and its flagship Coke, which achieved top spots in retail sales growth.
To counteract the decline, Coca-Cola is partnering with food chains to incorporate its sodas into combo meals, including efforts with McDonald’s to enhance its $5 meal deal that features a soft drink.
Coca-Cola exceeded Wall Street expectations with reported revenues of $12.4 billion for the second quarter, translating to approximately $0.84 per share, surpassing forecasts 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%, up from an earlier estimate of 8% to 9%.
Like Coca-Cola, Pepsi is facing challenges in capturing the attention of U.S. consumers, who are now gravitating towards products that emphasize weight loss and health. Additionally, Pepsi pointed to a series of recalls as a factor contributing to its muted performance in the second quarter.