In the U.S., consumers are increasingly opting for weight loss medications and non-alcoholic beverages, leading to a slowdown in soda purchases.
Despite this trend, Coca-Cola reported strong earnings for the second quarter, driven by robust global demand for its products, which led the company to revise its full-year forecasts upwards. CEO James Quincey expressed optimism about the company’s performance, stating that they achieved significant top-line and operational growth amid a shifting market.
However, Coca-Cola did experience a 1% decline in volume sales in North America during the quarter. Quincey attributed the decrease in their U.S. division to “softness in away-from-home channels,” which encompasses sales of water, sports drinks, coffee, tea, and soda.
This volume drop was somewhat mitigated by the success of their Fairlife milk brand and their flagship product, Coca-Cola, which ranked first and second in retail sales growth, respectively.
To counteract the sales decline, Quincey indicated that Coca-Cola is collaborating with food chains to incorporate its soda into combo meal deals. There are ongoing efforts with McDonald’s to enhance the fast food chain’s $5 meal offer, which includes a soft drink.
Overall, Coca-Cola’s performance exceeded Wall Street’s expectations with reported revenues of $12.4 billion, or approximately $0.84 per share. Analysts had anticipated revenue of $11.76 billion, or around $0.81 per share, according to FactSet.
Looking ahead, the company now predicts organic revenue growth of 9% to 10%, an increase from its earlier estimate of 8% to 9%.
Pepsi, facing similar challenges in appealing to U.S. consumers focused on weight loss and healthier options, has also encountered difficulties. Recent data indicates that young adults are consuming significantly less alcohol, which aligns with these changing consumer preferences. Earlier this month, Pepsi cited recalls as a reason for its lackluster performance in the second quarter.