Consumers in the U.S. are delaying soda purchases due to the rise of weight loss medications and non-alcoholic alternatives. Nonetheless, Coca-Cola reported strong second-quarter earnings on Tuesday, boosted by strong global demand for its beverages, leading the company to revise its full-year projections upward.
Coca-Cola’s CEO, James Quincey, expressed optimism about the company’s performance, indicating solid growth in revenue and operating income amid a changing market landscape.
However, Coca-Cola experienced a 1% decline in volume sales in North America during the quarter. Quincey pointed out that this decrease was influenced by a downturn in “away-from-home channels,” which encompass a range of beverages including water, sports drinks, coffee, tea, and sodas.
The company noted that the overall decline was somewhat mitigated by strong sales in its Fairlife milk products and significant retail sales growth of its flagship soda, Coke, which ranked first and second in sales during the quarter.
To counteract falling sales, Coca-Cola is collaborating with restaurant chains to incorporate its soda into combo meals. The beverage giant is reportedly working with McDonald’s to enhance the fast food chain’s $5 meal deal, which includes a soft drink.
Despite the challenges, Coca-Cola surpassed Wall Street’s expectations, reporting $12.4 billion in revenue for the quarter, equating to approximately $0.84 per share. Analysts had anticipated revenue of $11.76 billion, or about $0.81 per share, according to FactSet.
The company has now adjusted its forecast for organic revenue growth to between 9% and 10%, up from the prior estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in attracting U.S. consumers, who are increasingly gravitating towards healthier options and products designed for weight loss. A recent Gallup poll indicates a significant decrease in alcohol consumption among young adults in the U.S. In early July, Pepsi attributed its lackluster performance in the second quarter to multiple product recalls.