In the U.S., the growing popularity of weight loss drugs and non-alcoholic beverages is impacting soda sales. Despite this trend, Coca-Cola reported strong second-quarter earnings, attributing the success to high global demand for its products, which led the company to revise its full-year guidance upward.
Coca-Cola’s CEO James Quincey expressed optimism about the company’s performance, noting significant revenue and operating income growth amid a shifting market.
However, in North America, Coca-Cola experienced a 1% decline in volume sales during the quarter. Quincey explained this drop was largely due to weakened sales in “away-from-home channels,” which encompass water, sports drinks, coffee, tea, and soda.
The company’s decline in volume was partially mitigated by success in its Fairlife milk line and its flagship soda, Coke, which ranked first and second in retail sales growth respectively.
To combat the downturn, Coca-Cola is collaborating with food chains to incorporate its sodas into combo meals. Reports indicate that the company is working with McDonald’s to enhance the chain’s $5 meal deal that includes a soft drink.
Overall, Coca-Cola exceeded Wall Street forecasts, reporting $12.4 billion in revenue for the second quarter, translating to approximately $0.84 a share. Analysts had anticipated revenues of about $11.76 billion, or approximately $0.81 a share, according to FactSet.
The company also raised its projection for organic revenue growth to between 9% and 10%, increasing it from the previous estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in attracting U.S. consumers, who are increasingly drawn to products that emphasize weight loss and healthier lifestyles. A recent Gallup poll indicates that young adults in the U.S. are consuming significantly less alcohol than before. Earlier in July, Pepsi cited product recalls as a factor affecting its lackluster second-quarter performance.