Consumers in the U.S. are increasingly opting for weight loss medications and non-alcoholic drinks, leading to a slowdown in soda purchases. Despite this trend, Coca-Cola announced strong earnings for the second quarter on Tuesday, driven by robust global demand for its beverages, prompting the company to revise its full-year outlook upward.
Coca-Cola CEO James Quincey expressed optimism about the company’s second-quarter performance, highlighting positive growth in revenue and operating income even amid changing market conditions.
However, the company’s volume sales in North America fell by 1% during the quarter, which Quincey attributed to decreased demand in “away-from-home channels,” affecting water, sports drinks, coffee, tea, and soda. While there was a decrease in sales volume, the growth of Fairlife milk and strong sales of Coca-Cola’s signature soda helped mitigate some losses. Coke was noted as having the highest retail sales growth in its category.
In an effort to counter declining volume, Coca-Cola is partnering with restaurant chains to include its sodas in combo meal deals. Reports indicate the company is collaborating with McDonald’s on its $5 meal deal, which includes a soft drink.
Overall, Coca-Cola’s performance exceeded Wall Street expectations, with reported revenue of $12.4 billion for the second quarter, translating to approximately $0.84 per share. Analysts had anticipated revenue of $11.76 billion, or around $0.81 per share, according to FactSet.
The company has now adjusted its forecast for organic revenue growth, projecting an increase of 9% to 10%, a revision from the earlier prediction of 8% to 9%.
PepsiCo is facing similar challenges as consumers in the U.S. shift towards healthier choices and weight loss products. In early July, Pepsi noted that a series of product recalls contributed to its lackluster performance in the second quarter.