In the United States, the popularity of weight loss medications and non-alcoholic beverages is influencing consumer behavior, resulting in a slowdown in soda purchases.
Despite this trend, Coca-Cola reported strong earnings for the second quarter, buoyed by robust global demand for its beverage offerings. The company raised its full-year revenue guidance following this performance.
Coca-Cola’s CEO James Quincey expressed optimism about the quarterly results, highlighting notable growth in both top-line revenue and operating income amid a shifting market.
However, in North America, Coca-Cola experienced a 1% decline in volume sales during the quarter. Quincey attributed this decrease primarily to “softness in away-from-home channels,” which includes categories like water, sports drinks, coffee, tea, and carbonated sodas.
The company noted that this decline was somewhat mitigated by growth in its Fairlife milk brand and its flagship soda, Coca-Cola, which ranked first and second in retail sales growth during the quarter.
To tackle the volume drop, Quincey stated that Coca-Cola is collaborating with food chains to incorporate its sodas into combo meal offerings. Reports indicate ongoing efforts to partner with McDonald’s to enhance the appeal of its $5 meal deal, which includes a soft drink.
Overall, Coca-Cola exceeded Wall Street projections. The company reported revenue of $12.4 billion for the second quarter, translating to earnings of approximately $0.84 per share, surpassing analysts’ expectations of $11.76 billion in revenue and $0.81 per share.
Moreover, Coca-Cola has updated its forecast for organic revenue growth to between 9% and 10%, an increase from the previous estimate of 8% to 9%.
Pepsi, like Coca-Cola, has been facing challenges in attracting U.S. consumers, who are shifting towards healthier options and products that cater to weight loss. In early July, Pepsi attributed its lackluster second quarter performance to a series of product recalls.