Americans are increasingly hesitant to purchase sodas, influenced by the rise of weight loss medications and non-alcoholic alternatives.
Despite these trends, Coca-Cola announced strong second-quarter earnings, bolstered by a robust global demand for its beverage offerings, leading the company to raise its full-year projections. CEO James Quincey expressed optimism about the quarterly results, highlighting steady growth in revenue and operating income amid a changing market landscape.
However, Coca-Cola experienced a 1% drop in volume sales in North America during the quarter. Quincey attributed this decline primarily to reduced sales in “away-from-home channels,” which include water, sports drinks, coffee, tea, and soda. Notably, the downturn was somewhat mitigated by the popularity of Fairlife milk and the success of Coke, which ranked first and second in retail sales growth, respectively.
To counter the sales decline, Coca-Cola is collaborating with food chains to integrate its soda into combo meals, with efforts underway to enhance McDonald’s $5 meal deal that includes a beverage.
Coca-Cola’s revenue for the second quarter reached $12.4 billion, exceeding Wall Street’s expectations of $11.76 billion. This translates to earnings of approximately $0.84 per share, surpassing the anticipated $0.81. The company has adjusted its forecast for organic revenue growth to a range of 9% to 10%, up from the previous estimate of 8% to 9%.
Similarly, Pepsi has faced challenges in maintaining consumer interest in the U.S., as more people gravitate towards products focused on weight loss and healthier choices. A recent Gallup poll shows a significant decline in alcohol consumption among young adults in the U.S. In early July, Pepsi attributed its lackluster second quarter to a series of product recalls.