Consumer interest in weight loss drugs and healthier non-alcoholic options is causing a slowdown in soda sales in the United States. Despite this trend, Coca-Cola reported strong earnings for the second quarter, driven by robust global demand for its beverages, leading the company to raise its full-year projections.
Coca-Cola CEO James Quincey expressed optimism about the company’s performance, noting solid growth in revenue and operating income amid a changing market landscape. However, North American volume sales decreased by 1% in the quarter. Quincey attributed this decline to a drop in sales in “away-from-home channels,” encompassing water, sports drinks, coffee, tea, and soda products.
The decline in sales was partially mitigated by strong performance of Fairlife milk and Coca-Cola, which achieved significant retail sales growth in the quarter. In an effort to counterbalance the volume decrease, Coca-Cola is collaborating with restaurants to include its sodas in combo meal deals, including partnerships with McDonald’s to enhance meal promotions featuring soft drinks.
The company exceeded Wall Street expectations, reporting $12.4 billion in revenue for the second quarter, translating to approximately $0.84 per share, against analysts’ forecasts of $11.76 billion in revenue, or about $0.81 per share.
Coca-Cola has raised its organic revenue growth forecast to between 9% and 10%, up from a previous range of 8% to 9%.
Meanwhile, Pepsi is also facing challenges in attracting U.S. consumers who prioritize weight loss and healthier lifestyle choices. This shift in consumer behavior has contributed to Pepsi’s struggles, alongside disruptions caused by product recalls, which impacted its performance in the second quarter.