In the U.S., consumer preferences are shifting due to the popularity of weight loss medications and non-alcoholic beverages, leading to a slowdown in soda purchases.
Despite these trends, Coca-Cola reported strong second-quarter earnings, buoyed by robust global demand for its beverages. The company raised its full-year guidance following this performance.
Coca-Cola CEO James Quincey expressed optimism about the company’s performance, highlighting solid revenue and operating income growth despite a challenging market environment.
However, in North America, the company’s volume sales fell by 1% during the quarter. Quincey attributed this decline to reduced sales in “away-from-home channels,” including its offerings in water, sports drinks, coffee, tea, and sodas.
This drop in sales was partially mitigated by growth in its Fairlife milk products and its iconic Coca-Cola soda, which ranked first and second respectively in retail sales growth for the quarter.
To address the sales decline, Coca-Cola is collaborating with restaurant chains to include its sodas in combo meal deals. Reports indicate that Coca-Cola is working with McDonald’s to enhance its $5 meal deal, which incorporates a soft drink.
Overall, Coca-Cola’s performance exceeded Wall Street expectations, reporting revenues of $12.4 billion for the second quarter, translating to approximately $0.84 per share. Analysts had predicted revenues of $11.76 billion, or around $0.81 per share.
The company has now adjusted its forecast for organic revenue growth to between 9% and 10%, an increase from its earlier estimate of 8% to 9%.
Meanwhile, Pepsi faces its own challenges in appealing to U.S. consumers, who are increasingly leaning towards healthier options. In early July, Pepsi attributed its lackluster second-quarter performance to a series of product recalls.