Consumers in the U.S. are increasingly holding off on soda purchases, influenced by the popularity of weight loss medications and non-alcoholic alternatives. Despite this trend, Coca-Cola reported strong earnings for the second quarter, attributed to robust global demand for its beverage range, leading the company to raise its full-year guidance.
Coca-Cola’s CEO, James Quincey, expressed optimism about the company’s second-quarter performance, highlighting significant growth in both revenue and operating income amidst a shifting market. However, the North American market experienced a 1% decline in volume sales during the quarter, primarily due to weaker performance in “away-from-home channels” that encompass its water, sports drinks, coffee, tea, and soda offerings.
The decline in sales was somewhat mitigated by the success of its Fairlife milk and Coca-Cola itself, which led retail sales growth in its category. To address the drop in soda sales, Quincey mentioned ongoing efforts to partner with food chains to incorporate Coca-Cola products into meal deals, noting collaboration with McDonald’s on enhancing its $5 meal bundle.
Coca-Cola exceeded Wall Street expectations with reported revenue of $12.4 billion for the quarter, translating to about $0.84 per share, surpassing the forecast of $11.76 billion and $0.81 per share. The company has updated its organic revenue growth outlook to between 9% and 10%, an increase from the earlier projection of 8% to 9%.
Similar to Coca-Cola, Pepsi is facing challenges in attracting U.S. consumers, who are increasingly favoring weight loss-friendly and healthier options. In early July, Pepsi attributed its subdued performance in the second quarter to a series of product recalls.