Recent trends in weight loss medications and non-alcoholic beverage choices have caused a decline in soda purchases among consumers in the U.S.
Despite these challenges, Coca-Cola reported strong second-quarter earnings, fueled by a solid global demand for its beverage offerings. The company raised its full-year forecast as a result. CEO James Quincey expressed optimism about the results, highlighting the growth in revenue and operating income amidst a changing market.
However, Coca-Cola experienced a 1% drop in volume sales in North America during the quarter. Quincey attributed this decline to decreased purchases in away-from-home channels, which comprise their water, sports drinks, coffee, tea, and soda products. The decline was somewhat balanced by growth in its Fairlife milk brand and its flagship Coca-Cola product, which ranked first and second in retail sales growth, respectively.
To counter the volume drop, Quincey mentioned that Coca-Cola is collaborating with food chains to include its sodas in combo meals. This initiative includes a partnership with McDonald’s to enhance its $5 meal deal, which features a soft drink.
Overall, Coca-Cola exceeded Wall Street expectations with reported revenues of $12.4 billion, translating to approximately $0.84 per share. Analysts had anticipated revenue around $11.76 billion, or roughly $0.81 per share.
The company has now updated its forecast to expect organic revenue growth of 9% to 10%, a slight increase from the previous estimate of 8% to 9%.
Similarly, PepsiCo has faced difficulties in attracting U.S. consumers who are increasingly opting for healthier products and focusing on weight loss. The company recently reported lackluster second-quarter results attributed to various product recalls.