Weight loss medications and non-alcoholic alternatives are causing American consumers to hesitate in purchasing soft drinks. Despite this trend, Coca-Cola reported strong earnings for the second quarter, fueled by high global demand for its beverages, which led the company to raise its revenue forecast for the year.
Coca-Cola CEO James Quincey expressed optimism about the company’s performance, noting solid growth in both revenue and operating income despite the challenges in the market. However, in North America, the company’s volume sales decreased by 1% during the quarter. Quincey attributed this decline to a slowdown in out-of-home consumption channels, which encompass beverages such as water, sports drinks, coffee, tea, and soda.
This decline was somewhat mitigated by the success of Coca-Cola’s Fairlife milk brand and the company’s flagship product, Coke, which ranked highly in retail sales growth during the quarter. To counter the drop in sales, Quincey mentioned that Coca-Cola is collaborating with restaurant chains to incorporate its sodas into combo meals, specifically mentioning efforts with McDonald’s to enhance its $5 meal deal.
Coca-Cola’s overall performance exceeded Wall Street expectations, recording $12.4 billion in revenue, equating to approximately $0.84 per share. Analysts had predicted the company would generate around $11.76 billion in revenue, or about $0.81 per share. The company has also adjusted its organic revenue growth forecast to between 9% and 10%, up from a prior range of 8% to 9%.
Similarly, Pepsi has faced difficulties in attracting U.S. consumers who are increasingly focused on health and weight loss, with a notable decline in alcohol consumption among young adults. In early July, Pepsi cited a series of product recalls as a reason for its lackluster second-quarter results.