Consumers in the U.S. are increasingly hesitant to purchase sodas, influenced by the rise of weight loss medications and non-alcoholic alternatives.
Despite this trend, Coca-Cola reported strong earnings for the second quarter, thanks in part to robust global demand for its beverages. As a result, the company raised its full-year guidance. CEO James Quincey expressed optimism about the results, highlighting solid growth in revenue and operating income despite a challenging market environment.
However, Coca-Cola experienced a 1% decline in volume sales in North America during the quarter. Quincey attributed this decrease primarily to weaker sales in away-from-home channels, which encompass water, sports drinks, coffee, tea, and soda. This decline was somewhat mitigated by strong sales of its Fairlife milk products and its iconic Coke, which ranked first and second in retail sales growth during the quarter.
To counteract the sales drop, Coca-Cola is collaborating with food chains to include its soda in combo meals. The company is working with McDonald’s to enhance its $5 meal deal, which features a soft drink.
In financial terms, Coca-Cola surpassed Wall Street’s expectations, reporting $12.4 billion in revenue for the second quarter, translating to about $0.84 per share. This was higher than the forecasted revenue of $11.76 billion, or roughly $0.81 per share.
The company has now revised its forecast for organic revenue growth to between 9% and 10%, increasing its previous estimate of 8% to 9%.
Pepsi, like Coca-Cola, is facing challenges in attracting U.S. consumers who are increasingly focused on weight loss and healthier lifestyles. In early July, Pepsi noted that product recalls contributed to its lackluster performance in the second quarter.