Consumers in the U.S. are increasingly holding off on purchasing sodas, influenced by the rise of weight loss drugs and non-alcoholic alternatives. Despite this trend, Coca-Cola reported strong second-quarter earnings, buoyed by solid global demand for its beverages, leading the company to raise its full-year guidance.
Coca-Cola CEO James Quincey expressed optimism about the company’s performance, noting the impressive topline and operating income growth in a changing market. However, the company did see a 1% decline in volume sales in North America during the quarter. Quincey attributed this dip to “softness in away-from-home channels,” which encompass various beverages, including water, sports drinks, coffee and tea, alongside sodas.
To mitigate the impact of declining sales, Coca-Cola is collaborating with fast food chains to incorporate its sodas into combo meal offerings. Reportedly, the company is working with McDonald’s to enhance the fast food giant’s $5 meal deal that features a soft drink.
Despite challenges, Coca-Cola exceeded Wall Street expectations with second-quarter revenues of $12.4 billion, or approximately $0.84 per share, surpassing the projected revenue of $11.76 billion and earnings of about $0.81 per share.
The company has raised its forecast for organic revenue growth to between 9% and 10%, an increase from its previous estimate of 8% to 9%.
Similarly, Pepsi is facing difficulties in capturing the interest of U.S. consumers, who are gravitating towards products that support weight loss and healthier lifestyles. In early July, Pepsi attributed its lackluster second-quarter performance to a series of product recalls.