Weight loss medications and a rise in non-alcoholic beverage choices are causing a shift in consumer habits, leading many in the U.S. to refrain from purchasing soda.
Despite this trend, Coca-Cola reported strong earnings for the second quarter, fueled by high global demand for its beverages, prompting the company to increase its full-year revenue forecast.
Coca-Cola CEO James Quincey expressed optimism regarding the company’s performance, noting substantial growth in both revenue and operating income in a changing market landscape.
However, the company’s volume sales in North America experienced a 1% decline during the quarter. Quincey explained that the drop in U.S. sales was primarily due to diminished activity in away-from-home channels, which encompass products like water, sports drinks, coffee, tea, and soda.
The decline in volume was partially mitigated by success in other segments, including the Fairlife milk brand and the Coca-Cola soda itself, which saw significant retail sales growth.
To counteract the decline, Quincey mentioned that Coca-Cola is collaborating with food chains to incorporate its soda into combo meal offerings. The company is reportedly working with McDonald’s to enhance the fast food chain’s $5 meal deal, which features a soft drink.
In an impressive performance, Coca-Cola surpassed Wall Street projections for the quarter. The company announced $12.4 billion in revenue, equating to approximately $0.84 per share, against analyst expectations of $11.76 billion, approximately $0.81 per share.
Coca-Cola has since revised its forecast for organic revenue growth to a range of 9% to 10%, raising it from the previous estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in attracting U.S. consumers, who are increasingly focused on products that support weight loss and overall health. In early July, Pepsi attributed its lackluster second-quarter performance to several product recalls.