Consumers in the U.S. are increasingly opting for weight loss drugs and non-alcoholic alternatives, leading to a slowdown in soda purchases. Nevertheless, Coca-Cola reported strong second-quarter earnings, partially due to robust global demand for its beverages, prompting the company to revise its full-year outlook upwards.
Coca-Cola’s CEO, James Quincey, expressed optimism about the company’s performance, highlighting solid growth in both revenue and operating income amidst a shifting market landscape.
Despite this success, the company experienced a 1% decline in volume sales in North America during the quarter. Quincey attributed the downturn to decreased activity in “away-from-home channels,” which encompasses its water, sports drinks, coffee, tea, and sodas.
This drop was somewhat mitigated by strong sales of Fairlife milk and Coca-Cola’s flagship soda, which achieved significant retail sales growth during the period.
To counteract the declining soda sales, Coca-Cola is collaborating with fast food chains to incorporate its beverages into combo meals. The company is reportedly working with McDonald’s to enhance the appeal of its $5 meal deal that includes a soft drink.
Coca-Cola exceeded Wall Street expectations, reporting $12.4 billion in revenue for the second quarter, equating to approximately $0.84 per share, compared to analysts’ forecasts of $11.76 billion and $0.81 per share.
The company has now revised its forecast for organic revenue growth to between 9% and 10%, up from the previous range of 8% to 9%.
Similar to Coca-Cola, Pepsi has also been facing challenges in attracting U.S. consumers, who are increasingly shifting towards products that support weight loss and healthier lifestyles. In early July, Pepsi attributed its lackluster second-quarter performance to a series of product recalls.