Weight loss medications and non-alcoholic alternatives are leading American consumers to reduce their soda purchases. Despite this trend, Coca-Cola reported strong second-quarter earnings, attributed to high global demand for its beverages, prompting the company to increase its full-year outlook.
Coca-Cola’s CEO, James Quincey, expressed optimism regarding the second-quarter results, highlighting significant growth in both revenue and operating income in a changing market. However, the company’s volume sales in North America dropped by 1% during the quarter. Quincey explained that the decline was mainly due to weaker performance in channels outside the home, which includes a range of products such as water, sports drinks, coffee, tea, and sodas.
This downturn was somewhat mitigated by the success of Coca-Cola’s Fairlife milk line and its flagship soda, Coke, which ranked first and second in retail sales growth for the quarter, respectively. To counteract the decline, Quincey mentioned that Coca-Cola is collaborating with food chains to integrate its sodas into combo meals, including partnerships with McDonald’s to enhance its $5 meal deal that features a soft drink.
Overall, Coca-Cola exceeded Wall Street’s expectations by reporting $12.4 billion in revenue for the second quarter, equating to approximately $0.84 per share. Analysts had predicted revenues of about $11.76 billion, or around $0.81 per share. The company is now forecasting organic revenue growth of 9% to 10%, an increase from the earlier estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in engaging U.S. consumers, who are increasingly focused on healthier choices and weight loss products. Reports indicate that younger adults in the U.S. are consuming significantly less alcohol than before. Pepsi attributed its weakened performance in the second quarter to a series of product recalls.