Weight loss medications and non-alcoholic alternatives have led American consumers to reduce their soda purchases. Despite this trend, Coca-Cola reported strong earnings for the second quarter on Tuesday, fueled by robust global demand for its beverages, prompting the company to revise its annual forecasts upward.
“We are encouraged with our second-quarter results, which delivered solid topline and operating income growth in an ever-changing landscape,” stated Coca-Cola CEO James Quincey.
However, the company noted a 1% decline in volume sales in North America. During the earnings call, Quincey attributed this drop to “softness in away-from-home channels,” which includes sales of its water, sports drinks, coffee, tea, and sodas.
The decline was somewhat balanced by successful sales of Fairlife milk and Coca-Cola itself, with Coke ranking first and second respectively in retail sales growth during the quarter.
To combat the downturn in volume sales, Coca-Cola is collaborating with food chains to incorporate its sodas into combo meal offers. Reports suggest that the company is working with McDonald’s to enhance its $5 meal deal, which features a soft drink.
Overall, Coca-Cola exceeded Wall Street predictions, reporting $12.4 billion in revenue for the second quarter, translating to approximately $0.84 per share. Analysts had expected revenue of $11.76 billion or about $0.81 per share.
The company has now increased its forecast for organic revenue growth to between 9% and 10%, up from the earlier projection of 8% to 9%.
Similarly, Pepsi has faced challenges in engaging American consumers, who are increasingly favoring products that focus on weight loss and wellness. Additionally, a Gallup poll indicates that young adults in the U.S. are consuming significantly less alcohol than before. In early July, Pepsi attributed its lackluster second-quarter performance to a series of product recalls.