Weight loss drugs and non-alcoholic alternatives are causing consumers in the U.S. to hesitate in purchasing sodas. Despite this trend, Coca-Cola reported strong second-quarter earnings, largely due to solid global demand for its beverages, which has led the company to revise its annual financial forecasts upward.
Coca-Cola CEO James Quincey expressed optimism regarding the second-quarter results, highlighting noticeable growth in both revenue and operating income in a constantly evolving market. However, the company did see a 1% decline in volume sales in North America. Quincey attributed this drop to weakness in “away-from-home” channels, which encompass its water, sports drinks, coffee, tea, and soda offerings.
The decline was somewhat mitigated by success from its Fairlife milk line and the company’s flagship soda, Coke, which emerged at the top of retail sales growth rankings for the quarter. To counter the drop in soda consumption, Coca-Cola is collaborating with food chains to integrate its beverages into combo meal offerings, including efforts with McDonald’s to enhance its $5 meal deal, which features a soft drink.
Coca-Cola’s financial performance exceeded Wall Street expectations, as it reported $12.4 billion in revenue for the second quarter, translating to about $0.84 per share. Analysts had predicted revenues of approximately $11.76 billion, or around $0.81 per share. Following these results, the company has increased its forecast for organic revenue growth to a range of 9% to 10%, up from the previous estimate of 8% to 9%.
Pepsi, like Coca-Cola, is facing challenges in attracting U.S. consumers, who are increasingly favoring products aimed at weight loss and healthier lifestyles. Additionally, a recent Gallup poll revealed that young adults in the U.S. are significantly reducing their alcohol intake. Earlier in July, Pepsi attributed its lackluster second-quarter performance to a series of product recalls.