Weight loss medications and a shift towards non-alcoholic beverages are leading consumers in the U.S. to reduce soda purchases. Despite this trend, Coca-Cola reported strong earnings for the second quarter, fueled by robust global demand, prompting the company to raise its full-year performance predictions.
Coca-Cola’s CEO, James Quincey, expressed satisfaction with the quarterly results, highlighting growth in both revenue and operating income amid changing consumer preferences. However, the company experienced a 1% decline in volume sales in North America during the quarter. Quincey attributed this drop to decreased sales in “away-from-home channels,” which encompass bottled water, sports drinks, coffee, tea, and soda.
The decline was somewhat mitigated by the performance of Fairlife milk and Coca-Cola’s flagship soda, which ranked first and second in retail sales growth, respectively. To counter declining sales, Quincey noted that Coca-Cola is collaborating with food chains to integrate their soda products into combo meal offerings, including initiatives with McDonald’s to enhance its $5 meal deal featuring a soft drink.
Coca-Cola’s performance surpassed analysts’ expectations, with reported revenues of $12.4 billion and earnings of about $0.84 per share. Analysts had anticipated revenues of $11.76 billion and earnings of approximately $0.81 per share, as per FactSet. The company is now projecting an organic revenue growth of 9% to 10%, an increase from the earlier estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in attracting U.S. consumers, who are gravitating towards products that emphasize health and weight loss. In early July, Pepsi attributed its lackluster second-quarter results to a series of product recalls.