In the U.S., the popularity of weight loss drugs and non-alcoholic beverages is leading consumers to hesitate before purchasing sodas. Despite this trend, Coca-Cola reported strong earnings for the second quarter on Tuesday, driven by high demand for its beverage offerings, prompting the company to raise its full-year guidance.
Coca-Cola’s CEO, James Quincey, expressed optimism about the second-quarter results, highlighting solid growth in both revenue and operating income despite a shifting market.
However, the company faced a 1% decline in volume sales in North America during the quarter. Quincey attributed this decrease to a downturn in away-from-home channels, which encompass water, sports, coffee, tea, and soda products. The decline was somewhat mitigated by the success of Fairlife milk and the Coca-Cola brand soda, which ranked first and second in retail sales growth for the quarter.
To counteract the volume drop, Coca-Cola is collaborating with fast-food chains to incorporate its soda into combo meals. Notably, they are working with McDonald’s to enhance the fast food chain’s $5 meal deal that includes a soft drink.
Overall, Coca-Cola surpassed Wall Street expectations for revenue, reporting $12.4 billion, or $0.84 per share, compared to the anticipated $11.76 billion and $0.81 per share forecast by analysts.
The company has adjusted its outlook, now projecting organic revenue growth of 9% to 10%, an increase from the previous estimate of 8% to 9%.
Similarly, Pepsi has been facing challenges in engaging U.S. consumers, who are increasingly inclined toward products that support weight loss and healthier lifestyles. Recent data from Gallup indicates that young adults in the U.S. are consuming significantly less alcohol compared to previous years. Additionally, in early July, Pepsi cited a series of product recalls as a reason for its subdued performance in the second quarter.