Weight loss medications and the popularity of non-alcoholic beverages are causing U.S. consumers to reduce their soda intake. Despite this trend, Coca-Cola announced strong earnings for the second quarter, benefitting from high global demand, which led the company to increase its full-year guidance.
Coca-Cola CEO James Quincey expressed optimism about their second-quarter performance, noting substantial growth in revenue and operating income amid ongoing market changes. However, the company’s North American volume sales saw a 1% decline, attributed to decreased sales in away-from-home venues, impacting its water, sports drinks, tea, and soda products.
Despite the overall decline, Coca-Cola’s Fairlife milk and its flagship soda, Coke, experienced significant growth, ranking first and second in retail sales increase for the quarter. To counteract the decrease in soda sales, Coca-Cola is collaborating with restaurant chains to incorporate its drinks into combo meals, including a partnership with McDonald’s aimed at enhancing the fast-food chain’s $5 meal deal.
Coca-Cola surpassed Wall Street expectations, reporting $12.4 billion in revenue and earnings of about $0.84 per share, while the forecast was $11.76 billion in revenue, or roughly $0.81 per share, according to FactSet. The company has now raised its forecast for organic revenue growth to between 9% and 10%, up from its previous estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in engaging U.S. consumers, who are increasingly inclined towards products that support weight loss and healthier lifestyles. A Gallup poll indicated that young adults in the U.S. are consuming significantly less alcohol than in the past. In early July, Pepsi cited multiple product recalls as a factor contributing to its weak performance in the second quarter.