Weight loss medications and non-alcoholic options are leading consumers in the United States to reduce soda purchases.
Despite this trend, Coca-Cola reported strong second-quarter earnings, fueled by robust global demand, leading the company to raise its full-year outlook. CEO James Quincey expressed optimism about the results, highlighting solid revenue and operating income growth amid changing market conditions.
However, Coca-Cola experienced a 1% decline in volume sales in North America. During the earnings call, Quincey attributed this downturn to weaknesses in “away-from-home channels,” which encompass various beverage segments including water, sports drinks, coffee, tea, and sodas.
The decline in sales was somewhat mitigated by the performance of Fairlife milk and Coca-Cola products, with Coke ranking first and second in retail sales growth for the quarter. To counter the decrease, Coca-Cola is partnering with food chains, including McDonald’s, to integrate its sodas into combo meal deals.
Overall, Coca-Cola exceeded Wall Street expectations with second-quarter revenues of $12.4 billion, roughly $0.84 per share, surpassing forecasts of $11.76 billion and $0.81 per share. The company now anticipates organic revenue growth of 9% to 10%, raising its previous estimate of 8% to 9%.
Similarly, Pepsi has faced challenges reaching U.S. consumers who are increasingly focused on healthier choices and weight loss products. In early July, Pepsi cited a series of product recalls as a factor for its lackluster performance in the second quarter.