Weight loss medications and non-alcoholic beverage options are causing consumers in the U.S. to postpone their soda purchases. Despite this trend, Coca-Cola reported strong earnings for the second quarter, supported by robust global demand for its drinks. As a result, the beverage company has raised its full-year projections.
Coca-Cola CEO James Quincey expressed optimism about the company’s second-quarter performance, highlighting significant growth in topline and operating income amid a fluctuating market.
In North America, however, Coca-Cola experienced a 1% decline in volume sales for the quarter. Quincey noted that this drop was primarily attributed to reduced sales in “away-from-home channels,” including their water, sports drinks, coffee, tea, and soda segments.
This decline was partially offset by the strong performance of Fairlife milk and their iconic Coke brand, which ranked first and second in retail sales growth, respectively, during the quarter.
To counteract the downturn in sales, Quincey indicated that Coca-Cola is collaborating with food chains to incorporate soda into combo meal offerings. The company is reportedly working with McDonald’s to enhance its $5 meal deal that includes a soft drink.
Coca-Cola exceeded Wall Street expectations, reporting a revenue of $12.4 billion for the second quarter, translating to about $0.84 per share. Analysts had anticipated revenues of $11.76 billion, or approximately $0.81 per share, according to FactSet.
Looking ahead, Coca-Cola has adjusted its forecast for organic revenue growth, now estimating an increase of 9% to 10%, up from a previous forecast of 8% to 9%.
Similarly, Pepsi is facing challenges in attracting U.S. consumers who are increasingly interested in weight loss and healthier lifestyle choices. A recent Gallup poll showed that younger adults in the U.S. are drinking less alcohol than they used to. In early July, Pepsi attributed its weaker second-quarter performance to a series of product recalls.