Recent trends in weight loss medications and the popularity of non-alcoholic beverages have led to a decline in soda consumption among U.S. consumers.
Despite these shifts, Coca-Cola reported strong earnings for the second quarter, indicating robust global demand for its products. The company has revised its full-year guidance upward as a result. CEO James Quincey expressed optimism regarding the company’s performance, highlighting solid growth in revenue and operating income amid a changing market.
However, Coca-Cola faced a 1% decline in volume sales in North America, attributed to weaker performance in away-from-home channels that encompass water, sports drinks, coffee, tea, and sodas. Quincey explained that the U.S. division’s volume drop was linked to these challenges but noted that Fairlife milk and Coke itself helped mitigate some of the decline, achieving first and second place in retail sales growth, respectively.
To improve sales, Coca-Cola is collaborating with food chains to incorporate its soda into combo meals. Notably, the company is working with McDonald’s to enhance its $5 meal deal, which includes a soft drink.
Overall, Coca-Cola surpassed Wall Street expectations, reporting revenues of $12.4 billion for the second quarter, translating to earnings of about $0.84 per share, compared to analysts’ forecasts of $11.76 billion in revenue and $0.81 per share.
In light of the market trends, Coca-Cola raised its forecast for organic revenue growth to between 9% and 10%, above the previous estimate of 8% to 9%.
Pepsi is also facing challenges in capturing the attention of health-conscious U.S. consumers. A recent Gallup poll revealed that young adults are consuming significantly less alcohol, further influencing market dynamics. In early July, Pepsi attributed its lackluster second-quarter performance to a series of product recalls.