Consumers in the U.S. are increasingly delaying soda purchases due to the rise of weight loss medications and non-alcoholic alternatives.
Despite this trend, Coca-Cola reported strong earnings for the second quarter, attributing its success to robust global demand for its beverage offerings. The company announced an upward revision to its full-year guidance in light of these results.
Coca-Cola’s CEO, James Quincey, expressed optimism about the company’s performance, noting solid growth in top-line revenue and operating income in a changing market.
However, the company did face challenges in North America, where volume sales fell by 1% for the quarter. Quincey explained that the decline in the U.S. was driven by weak sales in away-from-home channels, which encompass a range of products including water, sports drinks, coffee, tea, and sodas.
The decline was somewhat offset by successes in Coca-Cola’s Fairlife milk line and its flagship Coca-Cola drink, both achieving notable growth in retail sales.
To counteract the dip in soda sales, Quincey stated that Coca-Cola is partnering with fast food chains to incorporate its beverages into combo meal deals. The company is notably collaborating with McDonald’s to enhance the value of its $5 meal deal, which includes a soft drink.
Coca-Cola’s overall performance exceeded Wall Street expectations, reporting $12.4 billion in revenue, translating to approximately $0.84 per share. Analysts had predicted revenue of $11.76 billion, or around $0.81 per share.
The company has now adjusted its forecast for organic revenue growth to 9% to 10%, up from its previous estimate of 8% to 9%.
Similarly, Pepsi has encountered difficulties attracting U.S. consumers, who are gravitating towards health-focused products and weight loss options. In early July, Pepsi attributed its weaker performance in the second quarter to a series of product recalls.