Consumers in the U.S. are increasingly holding off on soda purchases, influenced by weight loss medications and the growing popularity of non-alcoholic alternatives. Nevertheless, Coca-Cola reported strong earnings for the second quarter, driven by robust global demand for its beverages, leading the company to increase its full-year guidance.
Coca-Cola CEO James Quincey expressed optimism about the second-quarter performance, noting solid top-line growth and operating income amid a changing market landscape. However, there was a 1% decline in volume sales in North America. Quincey explained that the drop in the U.S. market was due to reduced sales in various channels, including water, sports drinks, coffee, tea, and soda.
Despite the decline, Coca-Cola’s Fairlife milk and its flagship soda, Coke, contributed positively, ranking first and second in retail sales growth for the quarter. To address the sales decline, Coca-Cola is collaborating with food chains to include its sodas in combo meals, particularly working with McDonald’s to enhance the fast food chain’s $5 meal deal.
Overall, Coca-Cola exceeded Wall Street’s expectations with $12.4 billion in revenue for the second quarter, equating to approximately $0.84 earnings per share. Analyst projections estimated revenue at around $11.76 billion and earnings of about $0.81 per share. The company revised its forecast for organic revenue growth to between 9% and 10%, an increase from the previous estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in attracting U.S. consumers who are increasingly opting for products that support weight loss and healthier lifestyles. A recent Gallup poll highlighted a significant decrease in alcohol consumption among young Americans. In early July, Pepsi attributed a lackluster second quarter to multiple recalls it experienced.