In the United States, the popularity of weight loss medications and non-alcoholic alternatives has led consumers to reduce their soda purchases. Despite this trend, Coca-Cola announced strong second-quarter earnings, driven by robust global demand for its beverage offerings, which has prompted the company to revise its full-year forecast upwards.
Coca-Cola’s CEO, James Quincey, expressed optimism regarding the second-quarter results, highlighting both solid revenue and operating income growth amid a changing market landscape. However, in North America, the company did experience a 1% decline in volume sales during the quarter. Quincey attributed this drop to decreased sales in away-from-home channels, which include bottled water, sports drinks, coffee, tea, and sodas.
This decrease was partially balanced by growth in Coca-Cola’s Fairlife milk brand and the performance of its flagship soda, Coke, which ranked first and second in retail sales growth for the quarter. To counter the decline in soda sales, Quincey noted that Coca-Cola is collaborating with food chains to include its products in combo meals, with McDonald’s being a key partner in promoting its $5 meal deal that includes a soft drink.
Overall, Coca-Cola exceeded Wall Street’s expectations, reporting $12.4 billion in revenue for the second quarter, translating to about $0.84 per share. Analysts had anticipated revenue closer to $11.76 billion, or approximately $0.81 per share.
The company has updated its forecast for organic revenue growth to a range of 9% to 10%, an increase from its previous estimate of 8% to 9%.
Similarly, PepsiCo is also facing challenges in capturing the interest of U.S. consumers who increasingly favor healthier options and weight loss products. Recent trends indicate that younger adults in the U.S. are consuming significantly less alcohol, according to a Gallup poll. Pepsi recently cited a series of product recalls as a factor contributing to its underwhelming performance in the second quarter.