Consumers in the U.S. are increasingly delaying their soda purchases, influenced by the rise of weight loss medications and non-alcoholic beverage options.
Despite this trend, Coca-Cola reported impressive second-quarter earnings, attributed to strong global demand for its beverages, which led the company to raise its full-year forecasts. CEO James Quincey expressed optimism about the company’s performance, highlighting solid growth in topline and operating income amidst a changing market.
However, in North America, Coca-Cola experienced a 1% decline in volume sales during the quarter. Quincey pointed out that the drop in their U.S. division was linked to “softness in away-from-home channels,” which encompasses water, sports drinks, coffee, tea, and soda products.
This decrease was somewhat mitigated by the success of Fairlife milk and Coca-Cola itself, which ranked first and second in retail sales growth, respectively. To counteract the downturn, Quincey mentioned ongoing collaborations with food chains to integrate Coca-Cola products into combo meals. Notably, the company is working with McDonald’s to enhance its $5 meal deal, which includes a soft drink.
Overall, Coca-Cola exceeded Wall Street expectations, reporting revenue of $12.4 billion, or approximately $0.84 per share, surpassing the anticipated $11.76 billion and $0.81 per share according to FactSet.
The company has now revised its forecast for organic revenue growth to between 9% and 10%, an increase from its prior estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in attracting U.S. consumers, who are gravitating towards products supporting weight loss and healthier lifestyles. A Gallup poll indicated that young adults in the U.S. are consuming significantly less alcohol than before. In early July, Pepsi attributed its lackluster second-quarter performance to a series of product recalls.