Consumers in the U.S. are increasingly turning to weight loss medications and non-alcoholic alternatives, leading to a slowdown in soda sales. Despite this trend, Coca-Cola reported solid second-quarter earnings, fueled by strong global demand for its beverages, prompting the company to raise its full-year outlook.
James Quincey, Coca-Cola’s CEO, expressed optimism regarding the company’s second-quarter performance, highlighting substantial growth in both revenue and operating income amid a changing market environment.
However, the North American market experienced a 1% decline in volume sales during the quarter. Quincey noted that this drop was mainly due to reduced sales in “away-from-home channels,” which encompass water, sports drinks, coffee, tea, and soda.
Coca-Cola indicated that the volume sales decline was somewhat mitigated by its Fairlife milk brand and the continued popularity of Coke, which ranked among the top in retail sales growth for the quarter. To counteract the decrease in soda sales, Quincey mentioned efforts to partner with food chains to include soda in combo meals, specifically referencing work with McDonald’s to enhance its $5 meal deal that features a soft drink.
Overall, Coca-Cola’s performance exceeded Wall Street expectations, reporting $12.4 billion in revenue for the second quarter, equivalent to about $0.84 per share. Analysts had anticipated revenue of $11.76 billion and earnings of approximately $0.81 per share.
Following these results, Coca-Cola adjusted its forecast for organic revenue growth to between 9% and 10%, increasing its earlier prediction of 8% to 9%.
In a similar vein, Pepsi has faced challenges in grabbing the attention of U.S. consumers, who are increasingly opting for products centered on weight loss and healthier lifestyles. A Gallup poll recently indicated that young adults in the U.S. are consuming significantly less alcohol than before. Earlier in July, Pepsi attributed its lackluster second-quarter results to a series of product recalls.