In the United States, consumers are increasingly opting for weight loss medications and non-alcoholic alternatives, leading to a slowdown in soda purchases.
Despite this trend, Coca-Cola reported strong second-quarter earnings on Tuesday, buoyed by robust global demand for its products. As a result, the beverage company has raised its full-year guidance.
James Quincey, CEO of Coca-Cola, expressed optimism about the results, stating the company achieved significant top-line and operating income growth amid changing market conditions.
However, Coca-Cola experienced a 1% decline in volume sales in North America during the quarter. Quincey attributed this drop to “softness in away-from-home channels,” which encompasses its range of products including water, sports drinks, coffee, tea, and soda. The decline was somewhat mitigated by growth in Fairlife milk and strong sales of Coke, which ranked first and second in retail sales growth respectively.
To counteract the volume decline, Quincey mentioned that Coca-Cola is collaborating with food chains to integrate its soda into combo meals. The company is reportedly working with McDonald’s to enhance its $5 meal deal that features a soft drink.
Overall, Coca-Cola surpassed Wall Street expectations, reporting $12.4 billion in revenue for the second quarter, translating to approximately $0.84 per share. Analysts had anticipated revenues of $11.76 billion, roughly $0.81 per share, according to FactSet.
Coca-Cola also revised its forecast for organic revenue growth, now estimating an increase between 9% and 10%, up from the previous estimate of 8% to 9%.
Similarly, Pepsi has faced challenges in attracting U.S. consumers who are shifting towards products focused on weight loss and healthier lifestyles. A Gallup poll indicates a notable decline in alcohol consumption among young adults in the U.S. In early July, Pepsi cited a series of product recalls as a contributing factor to its lackluster performance in the second quarter.