Weight loss medications and non-alcoholic beverages are causing U.S. consumers to reduce their soda purchases. Despite this trend, Coca-Cola experienced strong second-quarter earnings, bolstered by significant global demand for its beverage products. This performance has led the company to raise its full-year expectations.
CEO James Quincey expressed optimism about the second-quarter results, highlighting solid growth in both revenue and operating income amid changing market conditions.
Yet, in North America, Coca-Cola’s volume sales dipped by 1% during the quarter. Quincey pointed out that this decline was mainly due to decreases in away-from-home channels, which encompass products like water, sports drinks, coffee, tea, and soda.
The decrease was somewhat mitigated by the success of the Fairlife milk brand and strong sales of Coca-Cola itself, which ranked first and second in retail sales growth for the quarter. To address the sales decline, Quincey mentioned that Coca-Cola is collaborating with food chains, like McDonald’s, to incorporate its sodas into combo meals, including McDonald’s popular $5 meal deal.
Ultimately, Coca-Cola surpassed Wall Street projections, reporting $12.4 billion in revenue and earnings of approximately $0.84 per share. Analysts had predicted revenues of $11.76 billion, or roughly $0.81 per share.
The company now anticipates organic revenue growth of 9% to 10%, increasing its earlier forecast of 8% to 9%.
Similarly, Pepsi has faced challenges in attracting U.S. consumers, who are increasingly leaning towards weight loss-focused and healthier options. A recent Gallup poll indicates that young adults are consuming less alcohol than before. In early July, Pepsi attributed its lackluster second quarter results to a number of product recalls.