Weight loss medications and non-alcoholic beverages are causing consumers in the U.S. to reconsider their soda purchases, impacting major beverage companies.
Despite these trends, Coca-Cola reported strong earnings for the second quarter, supported by robust global demand for its products, leading the company to adjust its full-year forecast upward. James Quincey, CEO of Coca-Cola, expressed optimism about the company’s performance, citing solid growth in revenue and operating income in a fluctuating market.
However, Coca-Cola did experience a 1% decrease in volume sales in North America during the quarter. Quincey attributed this decline to reduced sales in away-from-home channels, which includes categories like water, sports drinks, coffee, tea, and soda. Yet, the downturn was somewhat balanced by the success of its Fairlife milk product and the classic Coca-Cola soda, which ranked highest and second in retail sales growth, respectively.
To combat volume declines, Coca-Cola is collaborating with fast-food chains to incorporate its sodas into meal combos. The company is reportedly working with McDonald’s to enhance its $5 meal deal, which features a soft drink.
Overall, Coca-Cola exceeded Wall Street’s expectations, reporting revenue of $12.4 billion for the second quarter, equating to about $0.84 per share. Analysts had anticipated 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%.
Meanwhile, Pepsi is encountering challenges in attracting U.S. consumers, who are leaning towards healthier choices and weight-loss-oriented products. In early July, Pepsi cited a series of product recalls as a contributing factor to its lackluster second quarter performance.