In the United States, the popularity of weight-loss medications and non-alcoholic options is leading consumers to hold back on soda purchases. Despite this trend, Coca-Cola reported strong earnings for the second quarter, benefiting from robust global demand for its products. The beverage leader raised its full-year forecast as a result.
James Quincey, CEO of Coca-Cola, expressed optimism about the company’s results, which showed solid growth in revenue and operating income amid a changing market environment.
However, Coca-Cola experienced a 1% decline in volume sales in North America during the quarter. Quincey attributed the downturn in the U.S. division to decreased sales in “away-from-home channels,” which encompass water, sports drinks, coffee, tea, and sodas.
The drop in soda sales was somewhat balanced out by gains from its Fairlife milk brand, as well as strong performance from Coke, which ranked first and second in retail sales growth for the quarter.
To counteract the decline in soda sales, Coca-Cola is collaborating with fast-food chains, such as McDonald’s, to integrate its beverages into meal deals. This includes efforts to improve the $5 meal deal that features a soft drink at McDonald’s.
Coca-Cola surpassed Wall Street expectations by reporting second-quarter revenues of $12.4 billion, or about $0.84 per share, compared to analysts’ predictions of $11.76 billion and $0.81 per share according to FactSet. The company has increased its forecast for organic revenue growth from the previous estimate of 8% to 9% to a new range of 9% to 10%.
Pepsi also faces challenges in attracting U.S. consumers, who are gravitating towards products that support weight management and healthier lifestyles. The company recently cited a series of product recalls for its disappointing performance in the second quarter.