Consumer trends towards weight loss drugs and non-alcoholic beverages are impacting soda sales in the U.S., leading to some hesitance in purchases.
Despite this trend, Coca-Cola announced strong second-quarter earnings, attributed to high global demand for its beverages, prompting the company to increase its full-year financial outlook. CEO James Quincey expressed optimism regarding the company’s performance, highlighting substantial revenue and operating income growth amid changing market conditions.
However, Coca-Cola faced a 1% decline in volume sales in North America during the quarter, primarily due to weaker demand in away-from-home categories, which encompass water, sports drinks, coffee, tea, and sodas. Quincey noted that the decline in the U.S. division was influenced by lessened demand for these products in certain channels.
To mitigate the decrease, Coca-Cola’s Fairlife milk and its flagship beverage, Coke, helped maintain growth, with these products ranking first and second in retail sales growth for the quarter. The company is also collaborating with food chains like McDonald’s to incorporate its soda into combo meals, particularly to enhance McDonald’s $5 meal deal that includes a soft drink.
Coca-Cola surpassed Wall Street’s financial expectations, reporting $12.4 billion in revenue, equating to approximately $0.84 per share, which exceeded the projected revenue of $11.76 billion and earnings of around $0.81 per share provided by FactSet. The company has now adjusted its forecast for organic revenue growth to between 9% and 10%, raising its earlier estimate of 8% to 9%.
Similarly, Pepsi is also facing challenges in engaging U.S. consumers, who are shifting towards healthier options and weight-loss-oriented products. In July, Pepsi attributed its disappointing second-quarter performance partly to a series of product recalls.