Weight loss medications and non-alcoholic alternatives have led to a decline in soda purchases in the United States.
Despite this trend, Coca-Cola reported strong second-quarter earnings on Tuesday, buoyed by robust global demand for its beverage products. This performance prompted the company to raise its full-year forecasts.
Coca-Cola’s CEO, James Quincey, expressed optimism about the company’s results, highlighting substantial growth in both revenue and operating income amid a shifting market landscape.
However, in North America, the company experienced a 1% decrease in volume sales for the quarter. Quincey attributed this decline to “softness in away-from-home channels,” which encompasses their water, sports drinks, coffee, tea, and soda offerings.
To mitigate the downturn, Coca-Cola pointed to its Fairlife milk and its classic Coke, both of which achieved top rankings in retail sales growth during the quarter. Quincey mentioned that the company is collaborating with fast-food chains to integrate its sodas into combo meal deals. Reports indicate that Coca-Cola is working closely with McDonald’s to enhance the appeal of its $5 meal deal, which includes a soft drink.
Overall, Coca-Cola surpassed Wall Street expectations, reporting $12.4 billion in revenue for the second quarter, translating to approximately $0.84 per share. Analysts had predicted the company would generate $11.76 billion, or around $0.81 per share, according to FactSet.
Looking ahead, Coca-Cola now anticipates organic revenue growth of between 9% and 10%, an increase from its previous forecast of 8% to 9%.
Similarly, Pepsi has faced challenges in attracting U.S. consumers, who are increasingly opting for products focused on weight loss and healthier lifestyles. A Gallup poll noted that young adults in the U.S. are consuming significantly less alcohol compared to previous years. In early July, Pepsi reported that a series of recalls contributed to its lackluster second-quarter performance.