Weight loss medications and non-alcoholic beverage alternatives are causing consumers in the U.S. to reduce their soda purchases. Despite this trend, Coca-Cola reported strong earnings for the second quarter, benefiting from robust global demand for its beverages and subsequently raised its full-year outlook.
Coca-Cola’s CEO, James Quincey, expressed optimism about the company’s performance, noting solid growth in both revenue and operating income amid a shifting market landscape. However, the company did experience a 1% decline in volume sales in North America, which Quincey attributed to weaker performance in “away-from-home channels,” including water, sports drinks, coffee, tea, and soda products.
The decline was partially mitigated by strong sales of Fairlife milk and Coca-Cola itself, which ranked first and second in retail sales growth during the quarter. To counter the drop in volume sales, Coca-Cola is collaborating with food chains, such as McDonald’s, to include its soda in combo meals, aiming to enhance the appeal of their meal deals.
Coca-Cola’s second-quarter revenue reached $12.4 billion, exceeding Wall Street’s expectations of $11.76 billion, translating to earnings of approximately $0.84 per share against an anticipated $0.81 per share. The company now projects organic revenue growth of 9% to 10%, an increase from its previous estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in attracting U.S. consumers who are leaning towards healthier lifestyles and weight loss products. The company recently attributed its lackluster performance in the second quarter to a series of product recalls.