Non-alcoholic beverages and weight loss drugs are causing U.S. consumers to hesitate in purchasing sodas, affecting major beverage companies.
Despite a challenging year, Coca-Cola reported strong second-quarter earnings, benefitting from solid global demand. This prompted the company to raise its full-year guidance. CEO James Quincey expressed optimism about their performance, highlighting growth in topline and operating income amid changing market conditions.
However, in North America, Coca-Cola faced a 1% decline in volume sales for the quarter. Quincey attributed this dip to reduced sales in away-from-home channels, which encompass their water, sports drinks, coffee, tea, and sodas. Nonetheless, the decline was mitigated by strong sales of Fairlife milk and Coke itself, which ranked highly in retail sales growth.
To counterbalance the volume drop, Coca-Cola is engaging with food service chains to incorporate its sodas into combo meals, particularly collaborating with McDonald’s on enhancing its $5 meal deal that includes a soft drink.
Coca-Cola exceeded Wall Street projections, reporting $12.4 billion in revenue, equating to approximately $0.84 per share. Analysts had anticipated revenue of $11.76 billion, or about $0.81 per share. The company has also raised its forecast for organic revenue growth to between 9% and 10%, up from earlier estimates of 8% to 9%.
Similar to Coca-Cola, Pepsi is struggling to capture U.S. consumer interest, as more people lean towards weight loss and healthier product options. Recent trends indicate that young adults in the U.S. are consuming less alcohol. In July, Pepsi cited a series of product recalls as a factor contributing to its underwhelming second-quarter results.