Weight loss medications and the rise of non-alcoholic beverages have led American consumers to reduce their soda purchases.
Despite this trend, Coca-Cola reported strong second-quarter earnings, bolstered by significant global demand for its products, prompting the company to raise its full-year forecast.
Coca-Cola CEO James Quincey expressed confidence in the company’s second-quarter performance, highlighting solid growth in revenue and operating income amidst changing market conditions.
However, in North America, Coca-Cola experienced a 1% decline in volume sales during the quarter. Quincey noted that this drop was due to “softness in away-from-home channels,” which encompasses sales from water, sports drinks, coffee, tea, and soda.
The decline was somewhat mitigated by the success of Fairlife milk and Coke, which ranked first and second in retail sales growth during the period. To counteract the drop in sales, Coca-Cola is collaborating with restaurants to include its beverages in meal combos, notably working with McDonald’s on enhancing its $5 meal deal that features a soft drink.
Despite the challenges, Coca-Cola exceeded Wall Street expectations with second-quarter revenue of $12.4 billion, translating to approximately $0.84 per share. Analysts had anticipated $11.76 billion in revenue, around $0.81 per share.
Looking ahead, Coca-Cola has revised its forecast for organic revenue growth to between 9% and 10%, up from the previous estimate of 8% to 9%.
Pepsi, similar to Coca-Cola, has faced challenges in engaging U.S. consumers who are increasingly leaning toward weight loss products and healthier options. A Gallup poll indicates that young adults in the U.S. are significantly reducing their alcohol consumption. In early July, Pepsi attributed its disappointing second-quarter results to a series of product recalls.