Weight loss medications and increased interest in non-alcoholic drinks are leading American consumers to refrain from purchasing sodas. Despite this trend, Coca-Cola announced strong earnings for the second quarter, fueled by significant global demand for its beverages, prompting the company to elevate its full-year forecasts.
Coca-Cola’s CEO, James Quincey, expressed optimism regarding the company’s second-quarter performance, citing solid growth in both revenue and operating income amidst a shifting marketplace.
However, North American volume sales dropped by 1% during the quarter. Quincey noted that the decline in the U.S. market was attributed to “softness in away-from-home channels,” which encompasses its water, sports, coffee, tea, and soda products. The decrease was somewhat mitigated by the success of Fairlife milk and Coca-Cola, which ranked first and second in retail sales growth, respectively.
To counteract the drop in soda sales, Coca-Cola is collaborating with fast-food chains to incorporate its drinks into combo meals. The company is specifically partnering with McDonald’s to enhance its $5 meal deal that includes a soft drink.
Coca-Cola’s performance exceeded Wall Street expectations, reporting $12.4 billion in revenue for the quarter, equating to approximately $0.84 per share. Analysts had predicted the company would generate around $11.76 billion in revenue, or roughly $0.81 per share.
The company has now adjusted its outlook, forecasting organic revenue growth of 9% to 10%, an increase from its earlier estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in engaging U.S. consumers, who are increasingly opting for products focused on weight loss and healthier lifestyles. A Gallup poll indicates that young adults in the U.S. are drinking considerably less alcohol than before. In early July, Pepsi attributed its lackluster second-quarter performance to a series of product recalls.