Consumers in the U.S. are showing hesitance in purchasing 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, largely attributed to robust global demand for its beverages. This success has led the company to raise its full-year revenue forecasts.
Coca-Cola’s CEO, James Quincey, expressed optimism about the company’s performance, highlighting growth in both revenue and operating income despite challenging market conditions. However, sales volume in North America fell by 1% during the quarter, a decline Quincey attributed to a decrease in off-premise consumption, which includes sales from restaurants and convenience stores.
The decline was somewhat mitigated by successful products like Fairlife milk and Coca-Cola itself, which achieved top rankings in retail sales growth. To counteract the decreasing volume, Coca-Cola is collaborating with food service chains, notably McDonald’s, to include its soft drinks in combo meals, enhancing their appeal to consumers.
Despite the North American volume challenges, Coca-Cola exceeded Wall Street expectations with second-quarter revenue of $12.4 billion, translating to earnings of approximately $0.84 a share, surpassing forecasts of $11.76 billion or $0.81 a share. The company has revised its outlook for organic revenue growth, now predicting an increase of 9% to 10%, up from earlier estimates of 8% to 9%.
Pepsi, on the other hand, is facing similar challenges as consumers shift towards healthier options, with a noticeable decline in interest from U.S. consumers. The company recently cited a series of product recalls as a contributing factor to its lackluster second-quarter performance.