Consumers in the U.S. are increasingly turning to weight loss medications and non-alcoholic options, which is affecting soda sales. Despite this trend, Coca-Cola reported strong second-quarter earnings, boosted by global demand for its products, prompting the company to raise its full-year guidance.
Coca-Cola’s CEO, James Quincey, expressed optimism about the company’s performance, stating, “We are encouraged with our second-quarter results, which delivered solid topline and operating income growth in an ever-changing landscape.” However, the company did experience a 1% decline in volume sales in North America during the quarter. Quincey attributed this decline to reduced sales in “away-from-home channels,” which encompass water, sports drinks, coffee, tea, and sodas.
This decrease was somewhat mitigated by growth in Coca-Cola’s Fairlife milk and its flagship soda, Coke, which were among the top performers in retail sales growth during the period. To counteract the decline in soda sales, Coca-Cola plans to collaborate with food chains to include its drinks in combo meals, notably working with McDonald’s to enhance the appeal of its $5 meal deal, which comes with a soft drink.
Coca-Cola exceeded Wall Street’s expectations with second-quarter revenue of $12.4 billion, equating to approximately $0.84 per share, surpassing the forecasted $11.76 billion and $0.81 per share. The company has also raised its forecast for organic revenue growth to between 9% and 10%, up from the previous estimate of 8% to 9%.
In a similar situation, Pepsi is facing challenges in engaging U.S. consumers who are prioritizing healthier and weight-loss-focused products. The beverage company cited product recalls as a factor in its lackluster second-quarter results.