Weight loss medications and non-alcoholic alternatives are leading many U.S. consumers to reduce their soda purchases. Despite this, Coca-Cola announced strong earnings for the second quarter, fueled by robust global demand for its beverages, prompting the company to revise its annual outlook upward.
Coca-Cola’s CEO James Quincey expressed optimism about the company’s performance, noting solid growth in revenue and operating income amid a changing market environment. However, in North America, the company experienced a 1% decline in volume sales during the quarter. Quincey attributed this downturn in its U.S. operations to a decrease in demand in away-from-home channels, impacting sales of water, sports drinks, coffee, tea, and sodas.
The decline was somewhat mitigated by the popularity of Coca-Cola’s Fairlife milk and its flagship soda, which ranked first and second in retail sales growth for the quarter. To address the decrease in sales, Coca-Cola is partnering with food chains to include its sodas in combo meal offerings, collaborating with McDonald’s to enhance the fast-food chain’s $5 meal deal that includes a soft drink.
Despite the challenges, Coca-Cola exceeded Wall Street expectations by reporting $12.4 billion in revenue, equating to about $0.84 per share, surpassing the anticipated $11.76 billion and $0.81 per share, as estimated by FactSet. The company now projects organic revenue growth between 9% and 10%, an increase from its prior forecast of 8% to 9%.
Meanwhile, Pepsi is also facing difficulties as U.S. consumers increasingly opt for weight-loss-friendly and healthier products. A Gallup poll highlights that young adults in the U.S. are consuming significantly less alcohol than before. Additionally, Pepsi reported a muted second quarter, partially attributing the results to a series of product recalls.