Weight loss medications and a rise in non-alcoholic beverage options have led American consumers to reduce their soda purchases. In this challenging environment, Coca-Cola reported strong second-quarter earnings, attributing its success to robust global demand for its carbonated drinks. This prompted the company to raise its full-year revenue guidance.
Coca-Cola’s CEO, James Quincey, expressed optimism regarding their second-quarter results, highlighting significant growth in both revenue and operating income amidst changing market conditions. However, the company observed a 1% dip in volume sales in North America. Quincey explained in the earnings call that this decline was particularly evident in “away-from-home channels,” which cover a variety of beverages including water, sports drinks, coffee, tea, and sodas.
Despite the overall decline, Coca-Cola noted that their Fairlife milk products and the Coke brand itself contributed positively, with both ranking among the top retail sales growth leaders for the quarter. To combat the drop in soda sales, Quincey mentioned that Coca-Cola is collaborating with food chains, including McDonald’s, to incorporate its beverages into combo meal offerings.
Coca-Cola’s financial performance exceeded Wall Street predictions, with the company reporting revenues of $12.4 billion, equating to approximately $0.84 per share, surpassing forecasts of $11.76 billion and $0.81 per share. The company has adjusted its expectations for organic revenue growth, now projecting between 9% and 10%, up from the earlier estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in appealing to U.S. consumers, who are increasingly gravitating towards weight loss-friendly and healthier product options. Recent trends indicate that young adults in the U.S. are decreasing their alcohol consumption. In July, Pepsi attributed its lackluster second-quarter performance to a series of product recalls.