Weight loss medications and non-alcoholic beverage alternatives are leading consumers in the U.S. to delay purchasing sodas.
Coca-Cola, however, reported strong second-quarter earnings, supported by high global demand for its beverages, which led the company to increase its full-year outlook. CEO James Quincey expressed optimism regarding the results, noting the solid growth in revenue and operating income despite the challenging market conditions.
In North America, volume sales dipped by 1% during the quarter, which Quincey attributed to reduced activity in away-from-home channels, affecting its water, sports drinks, coffee, tea, and soda offerings. Nevertheless, the decline was somewhat mitigated by the success of Fairlife milk and the strong performance of Coke, which ranked first and second in retail sales growth during this period.
To counterbalance the volume decrease, Coca-Cola is collaborating with food chains to include its sodas in combo meals. Specifically, discussions are underway with McDonald’s to enhance the fast-food chain’s $5 meal deal, which includes a soft drink.
Ultimately, Coca-Cola surpassed Wall Street projections for the quarter, reporting revenues of $12.4 billion, equating to approximately $0.84 per share. Analysts had predicted revenues of $11.76 billion, or around $0.81 per share.
The company also raised its forecast for organic revenue growth to a range of 9% to 10%, up from the previous estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in attracting U.S. consumers, who are increasingly opting for weight loss and health-focused products. A Gallup poll indicates that young adults in the U.S. are consuming significantly less alcohol than before. In early July, Pepsi attributed its disappointing second-quarter performance to a series of product recalls.