Consumer interest in weight loss medications and non-alcoholic beverages has led to a slowdown in soda sales in the United States. Despite this trend, Coca-Cola reported strong earnings for the second quarter, buoyed by high global demand for its beverages. This success has prompted the company to raise its forecasts for the year.
Coca-Cola’s CEO, James Quincey, expressed optimism about the company’s performance, highlighting solid growth in revenue and operating income despite changing market dynamics. However, the North American market did experience a 1% decline in volume sales during the quarter. Quincey attributed this drop to decreased consumption in “away-from-home channels,” which span categories including water, sports drinks, coffee and tea, as well as sodas.
The decline in volume was somewhat mitigated by the performance of Fairlife milk and Coca-Cola’s flagship soda, which achieved significant retail sales growth. To combat these challenges, the company is collaborating with restaurants to include its soda in combo meal deals. Reports suggest that Coca-Cola is working with McDonald’s to enhance its $5 meal deal, which features a soft drink.
Coca-Cola surpassed analysts’ expectations, reporting revenue of $12.4 billion and earnings of approximately $0.84 a share, outperforming the anticipated $11.76 billion and $0.81 a share, according to FactSet. The beverage giant now projects organic revenue growth of 9% to 10%, raising its earlier forecast of 8% to 9%.
Pepsi, similarly, is facing challenges in engaging U.S. consumers, who are increasingly favoring healthier options and focusing on weight loss. In early July, Pepsi pointed to a series of product recalls as contributing factors to its lackluster performance in the second quarter.