Consumers are increasingly opting for weight loss medications and non-alcoholic alternatives in the U.S., which has led to a decrease in soda sales.
Despite this trend, Coca-Cola reported strong second-quarter earnings, supported by steady global demand for its beverages. This prompted the company to raise its forecasts for the year. Coca-Cola’s CEO, James Quincey, expressed satisfaction with the results, highlighting substantial growth in both revenue and operating income within a rapidly changing market.
However, in North America, Coca-Cola’s volume sales fell by 1% in the quarter. Quincey attributed this decline to weaker performance in away-from-home channels, which encompass water, sports drinks, coffee, tea, and sodas. This drop was somewhat mitigated by the success of the Fairlife milk line and robust sales of Coke, which ranked first and second in retail growth during this period.
To counteract these challenges, Coca-Cola is collaborating with food chains to incorporate its sodas into promotional combo meals. They are reportedly enhancing McDonald’s meal offerings, particularly aimed at boosting the fast-food chain’s $5 meal deal that includes a soft drink.
In the second quarter, Coca-Cola surpassed Wall Street expectations with $12.4 billion in revenue, equating to about $0.84 per share. Analysts had anticipated about $11.76 billion in revenue, or roughly $0.81 per share, based on FactSet data.
The company has now revised its forecast for organic revenue growth to between 9% and 10%, an increase from the earlier estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in attracting U.S. consumers, who are leaning more towards health-conscious products. In early July, Pepsi cited a series of product recalls as a factor in its disappointing second-quarter results.