Consumers in the U.S. are increasingly hesitant to purchase sodas, influenced by the availability of weight loss medications and non-alcoholic alternatives.
Despite this trend, Coca-Cola reported strong earnings for the second quarter on Tuesday, buoyed by significant global demand for its beverage products, leading the company to enhance its full-year guidance.
Coca-Cola’s CEO, James Quincey, expressed optimism about the company’s performance, noting solid growth in both revenue and operating income amid a changing market landscape.
However, in North America, the company experienced a 1% decline in volume sales for the quarter. Quincey attributed this downturn to reduced sales in off-premise channels, which include water, sports drinks, coffee, tea, and soda.
This decline was partially mitigated by successes in its Fairlife milk brand and Coca-Cola’s soda offerings, which ranked first and second in retail sales growth during the quarter.
To address the drop in volume, Quincey mentioned that Coca-Cola is collaborating with food chains to incorporate its sodas 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.
Coca-Cola reported revenues of $12.4 billion for the second quarter, surpassing Wall Street expectations. Analysts had anticipated about $11.76 billion in revenue. The earnings translated to approximately $0.84 per share, exceeding the projected $0.81 per share forecast by FactSet.
Looking ahead, the beverage company has raised its forecast for organic revenue growth to between 9% and 10%, up from the earlier estimate of 8% to 9%.
Similarly, PepsiCo has also faced challenges in attracting U.S. consumers, who are increasingly favoring products focused on weight management and healthier lifestyles. Recent data from Gallup indicates a notable decline in alcohol consumption among young adults in the U.S. In early July, Pepsi attributed its muted second-quarter performance to a series of product recalls.