Weight loss medications and non-alcoholic alternatives are causing consumers in the U.S. to hesitate before purchasing sodas. Despite this trend, Coca-Cola reported strong earnings for the second quarter, benefiting from robust global demand for its beverages, which led the company to raise its full-year forecast.
Coca-Cola’s CEO, James Quincey, expressed satisfaction with the company’s performance, highlighting solid revenue and operating income growth amid a rapidly changing market. However, the company observed a 1% decline in volume sales in North America during the same quarter. Quincey noted that the drop in U.S. volume sales was largely due to weaker performance in away-from-home channels, including water, sports drinks, coffee, tea, and soda.
The decline was somewhat countered by the popularity of Fairlife milk and Coca-Cola itself, with the soda brand achieving first and second place in retail sales growth for the quarter. To address the volume drop, Coca-Cola is collaborating with food chains to integrate their sodas into combo meal offerings. Reports indicate that the company is working with McDonald’s to enhance its $5 meal deal that includes a soft drink.
Coca-Cola’s second-quarter results exceeded Wall Street expectations, reporting $12.4 billion in revenue, or approximately $0.84 per share, while analysts had predicted revenues of around $11.76 billion, or about $0.81 per share. As a result, the company has adjusted its estimates for organic revenue growth to between 9% and 10%, an increase from its previous projection of 8% to 9%.
Pepsi is also facing challenges in capturing the interest of U.S. consumers increasingly focused on health and weight loss. In July, Pepsi attributed its lackluster performance in the second quarter to a series of product recalls.