Weight loss medications and non-alcoholic alternatives are leading consumers in the U.S. to cut back on soda purchases.
Despite this trend, Coca-Cola reported strong earnings for the second quarter, supported by robust global demand for its beverages, prompting the company to update its full-year guidance positively.
Coca-Cola CEO James Quincey expressed optimism about the company’s performance, noting, “We are encouraged with our second-quarter results, which delivered solid topline and operating income growth in an ever-changing landscape.”
In North America, volume sales fell by 1% during the quarter, which Quincey attributed to a decrease in consumer spending on drinks outside the home, including water, sports drinks, coffee, tea, and soda. However, sales of Fairlife milk and Coca-Cola itself contributed positively, with both achieving significant retail sales growth.
To address the decline in soda sales, Coca-Cola plans to collaborate with restaurant chains to include its drinks in combo meals. Notably, the company is working with McDonald’s to enhance the appeal of its $5 meal deal, which features a soft drink.
Despite the volume drop, Coca-Cola exceeded Wall Street expectations, reporting $12.4 billion in revenue for the quarter, equating to approximately $0.84 per share. Analysts had predicted revenue of $11.76 billion, or about $0.81 per share, according to FactSet.
Coca-Cola now anticipates organic revenue growth between 9% and 10%, up from its earlier projection of 8% to 9%.
Similarly, Pepsi faces challenges in attracting U.S. consumers, who are increasingly turning to healthier products as well as weight management solutions. Recently, Pepsi cited multiple recalls as a factor in its lackluster performance in the second quarter.