Consumers in the U.S. are increasingly delaying soda purchases due to the rise of weight loss drugs and healthier beverage options. Despite this trend, Coca-Cola reported strong earnings for the second quarter, bolstered by global demand for its products, leading the company to raise its full-year forecast.
Coca-Cola’s CEO, James Quincey, expressed optimism about their second-quarter performance, highlighting significant growth in revenue and operating income amid a changing market landscape. However, the company did experience a 1% decrease in sales volume in North America, attributed to a decline in “away-from-home channels” such as water, sports drinks, coffee, tea, and sodas.
The dip in volume was somewhat mitigated by strong sales of Fairlife milk and Coca-Cola’s own soda, which ranked first and second in retail sales growth for the quarter. To combat the volume decrease, Coca-Cola is collaborating with fast-food chains to integrate its beverages into combo meal offerings. Reports indicate that an initiative is ongoing with McDonald’s aimed at enhancing the appeal of its $5 meal deal, which includes a soda.
Financially, Coca-Cola outperformed Wall Street expectations, reporting $12.4 billion in revenue for the quarter, equating to approximately $0.84 per share. Analysts had predicted revenues of around $11.76 billion and earnings of about $0.81 per share.
Following this performance, Coca-Cola has raised its outlook for organic revenue growth to between 9% and 10%, an increase from its earlier estimate of 8% to 9%.
On the flip side, Pepsi is facing challenges in appealing to the health-conscious U.S. market, where consumers are shifting towards products that promote weight loss and healthier living. A Gallup poll noted a significant decrease in alcohol consumption among young adults in the U.S. Additionally, Pepsi attributed its lackluster second quarter to a series of product recalls earlier this month.