Weight loss medications and non-alcoholic alternatives are causing U.S. consumers to hesitate before purchasing sodas. Nevertheless, Coca-Cola reported strong earnings for the second quarter, driven by significant global demand for its beverage offerings, leading the company to raise its full-year projections.
Coca-Cola CEO James Quincey expressed optimism about the company’s second-quarter performance, highlighting solid top-line and operating income growth despite a shifting market landscape.
However, in North America, the company experienced a 1% decline in volume sales during the quarter. Quincey attributed this decrease to “softness in away-from-home channels,” which encompass various products, including water, sports drinks, coffee, tea, and soda.
This decline was somewhat mitigated by positive contributions from Coca-Cola’s Fairlife milk brand and its flagship soda, Coke, which ranked first and second in retail sales growth during the quarter.
To counteract the volume decline, Quincey noted that Coca-Cola is collaborating with food chains to integrate its sodas into combo meals. Reports suggest that the beverage giant is working with McDonald’s to enhance the fast-food chain’s $5 meal deal, which includes a soft drink.
Despite the volume decline, Coca-Cola surpassed Wall Street expectations by reporting revenue of $12.4 billion, which translates to approximately $0.84 per share. Analysts had estimated revenue would be around $11.76 billion, or roughly $0.81 per share.
The company has adjusted its forecast for organic revenue growth to between 9% and 10%, up from an earlier prediction of 8% to 9%.
Similarly, Pepsi is facing challenges in attracting U.S. consumers, who are increasingly focused on weight loss and healthier lifestyle choices. Recent surveys indicate that young adults in the U.S. are consuming far less alcohol than in previous years. In early July, Pepsi attributed its lackluster second-quarter performance to a series of product recalls.