Weight loss medications and alcohol-free alternatives are leading U.S. consumers to reduce their soda purchases. Despite this trend, Coca-Cola reported strong second-quarter earnings, buoyed by robust global demand for its beverages, prompting the company to raise its full-year projections.
Coca-Cola CEO James Quincey expressed optimism about the company’s second-quarter performance, highlighting solid growth in revenue and operating income amid a shifting market landscape.
However, North America saw a 1% decline in volume sales for the quarter. During the earnings call, Quincey attributed the drop in the U.S. division to “softness in away-from-home channels,” which encompasses water, sports drinks, coffee, tea, and soda products.
This decline was partially offset by the success of the Fairlife milk brand and Coca-Cola, which achieved first and second place in retail sales growth during this period.
To counter the decline, Quincey noted that Coca-Cola is collaborating with food chains to integrate its beverages into combo meals. The company is reportedly partnering with McDonald’s to enhance the fast food chain’s $5 meal deal that includes a soft drink.
Overall, Coca-Cola surpassed Wall Street expectations, reporting $12.4 billion in revenue for the second quarter, equating to approximately $0.84 per share. This exceeded estimates of $11.76 billion in revenue and $0.81 per share, as predicted by FactSet.
The company now anticipates organic revenue growth between 9% and 10%, upgrading its previous forecast of 8% to 9%.
Similarly, Pepsi has faced challenges in attracting U.S. consumers, who are increasingly gravitating toward weight loss-focused products and healthier lifestyles. A Gallup poll indicated that young adults in the U.S. are consuming significantly less alcohol than before. Pepsi’s lackluster second-quarter performance was partly attributed to a series of product recalls.