In the U.S., consumers are increasingly turning to weight loss medications and non-alcoholic beverages, which has resulted in a slowdown in soda purchases. Despite this trend, Coca-Cola reported strong second-quarter earnings on Tuesday, driven by robust global demand for its products, 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 revenue and operating income growth amid changing market dynamics. However, the company experienced a 1% decline in volume sales in North America, primarily due to weaker demand in away-from-home channels, which encompasses beverages like water, sports drinks, coffee, tea, and soda.
To counteract this volume dip, Coca-Cola cited positive contributions from its Fairlife milk brand and the popularity of its flagship soda, Coke, which ranked among the top in retail sales growth for the quarter. Quincey indicated that Coca-Cola is collaborating with restaurant chains to integrate its soda into combo meals, specifically mentioning efforts with McDonald’s to enhance its $5 meal deal that includes a soft drink.
Overall, Coca-Cola exceeded Wall Street expectations, reporting $12.4 billion in revenue for the second quarter, translating to approximately $0.84 per share. Analysts had anticipated revenue of $11.76 billion and earnings of around $0.81 per share. The company now projects organic revenue growth between 9% and 10%, revising its earlier forecast of 8% to 9%.
Pepsi similarly faces challenges in attracting U.S. consumers, who are favoring weight-loss-oriented and healthier products. A Gallup poll recently noted that young adults in the U.S. are consuming significantly less alcohol than in previous years. In early July, Pepsi attributed its lackluster second-quarter performance to a series of product recalls.