Consumers in the U.S. are increasingly hesitating to purchase sodas, influenced by the rise of weight loss medications and non-alcoholic drink alternatives.
Despite this trend, Coca-Cola reported impressive earnings for the second quarter, fueled by strong global demand for its beverages, leading the company to raise its annual forecast. CEO James Quincey expressed optimism about the results, which showed positive growth amidst changing market conditions.
However, Coca-Cola saw a 1% decline in volume sales in North America during the quarter. Quincey noted that this decrease was mainly due to weaker performance in away-from-home channels, which includes sales of water, sports drinks, coffee, tea, and soda.
The decline in soda sales was somewhat balanced by the success of its Fairlife milk and Coca-Cola itself, which ranked first and second in retail sales growth respectively. To combat the downturn, Quincey mentioned that Coca-Cola is collaborating with fast food chains to include its drinks in combo meal deals, including working with McDonald’s to enhance its $5 meal offering.
Overall, Coca-Cola exceeded Wall Street forecasts, reporting $12.4 billion in revenue, or approximately $0.84 per share, compared to expectations of $11.76 billion or about $0.81 per share.
Looking ahead, Coca-Cola has increased its forecast for organic revenue growth to a range of 9% to 10%, revising its previous estimate of 8% to 9%.
Pepsi, like Coca-Cola, is facing challenges in engaging U.S. consumers, many of whom are opting for health-focused products and reducing alcohol intake, as indicated by a Gallup poll. In early July, Pepsi pointed to a series of product recalls as a factor contributing to its weaker performance in the second quarter.