Weight loss medications and non-alcoholic alternatives are causing U.S. consumers to reduce their soda purchases. Despite this trend, Coca-Cola reported strong second-quarter earnings on Tuesday, buoyed by robust global demand for its beverages, leading the company to raise its full-year forecasts.
Coca-Cola CEO James Quincey expressed optimism about the company’s performance, stating, “We are encouraged with our second-quarter results, which delivered solid topline and operating income growth in an ever-changing landscape.”
Nonetheless, volume sales in North America fell by 1% during the quarter. Quincey noted that the decrease for the U.S. segment resulted from “softness in away-from-home channels,” which encompass water, sports drinks, coffee, tea, and sodas.
The decline was somewhat mitigated by the success of Fairlife milk and Coca-Cola’s soda, which ranked first and second in retail sales growth for the quarter. To counterbalance the drop in volume, Quincey mentioned that Coca-Cola is collaborating with food chains to incorporate their sodas into combo meals, specifically working with McDonald’s to enhance the fast-food chain’s $5 meal deal that includes a soft drink.
Overall, Coca-Cola exceeded Wall Street’s expectations, reporting $12.4 billion in revenue for the second quarter, translating to approximately $0.84 per share. Analysts had predicted revenues of $11.76 billion, roughly $0.81 per share, according to FactSet.
The company has now revised its forecast for organic revenue growth to between 9% and 10%, an increase from its prior estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in engaging U.S. consumers who are shifting towards products that support weight loss and healthier lifestyles. Recent trends reveal that young adults in the U.S. are consuming significantly less alcohol. In early July, Pepsi attributed its lackluster second quarter performance to a series of product recalls.