Consumers in the U.S. are increasingly opting for weight loss medications and non-alcoholic beverages, which is impacting soda sales.
Despite this trend, Coca-Cola reported strong earnings for the second quarter on Tuesday, with heightened global demand for its products leading the company to increase its full-year outlook.
CEO James Quincey expressed optimism about the results, noting solid growth in both revenue and operating income amidst a shifting market.
However, the company did see a 1% decline in volume sales within North America. Quincey attributed the dip to decreased sales in “away-from-home channels,” which encompasses products like water, sports drinks, coffee, tea, and sodas.
This decline was somewhat counterbalanced by sales of Fairlife milk and strong performance from Coke, which ranked first and second in retail sales growth in the quarter.
To address the volume drop, Coca-Cola is partnering with restaurant chains to incorporate its sodas into combo meal options. The company is reportedly collaborating with McDonald’s to enhance its popular $5 meal deal, which includes soft drinks.
Coca-Cola’s performance exceeded Wall Street expectations, as the company reported $12.4 billion in revenue, equating to approximately $0.84 per share. Analysts had anticipated revenues of around $11.76 billion, or roughly $0.81 per share.
Looking ahead, Coca-Cola has revised its forecast for organic revenue growth to between 9% and 10%, up from its earlier estimate of 8% to 9%.
Pepsi, like Coca-Cola, is facing challenges in attracting U.S. consumers who are shifting toward healthier lifestyles and products aimed at weight management. Pepsi recently cited a series of product recalls as a contributing factor to its subdued performance in the second quarter.