Weight loss medications and non-alcoholic alternatives are prompting U.S. consumers to reduce soda purchases. Despite this trend, Coca-Cola reported strong second-quarter earnings, benefitting from high global demand for its beverages, which led the company to raise its full-year outlook.
Coca-Cola CEO James Quincey expressed optimism about the company’s performance, highlighting “solid topline and operating income growth in an ever-changing landscape.” However, volume sales in North America fell by 1% in the quarter. Quincey noted that this decline was influenced by reduced sales in away-from-home channels, which encompass water, sports drinks, coffee, tea, and sodas.
To mitigate the drop, Coca-Cola’s dairy brand, Fairlife, and its flagship drink, Coke, performed well in retail, securing the top two positions in sales growth for the quarter. Quincey mentioned that the company is collaborating with food chains to incorporate its sodas into combo meals, with a focus on enhancing McDonald’s $5 meal deal that includes a soft drink.
Overall, Coca-Cola exceeded Wall Street expectations with a revenue of $12.4 billion for the second quarter, translating to about $0.84 per share, surpassing forecasts of $11.76 billion and $0.81 per share, as reported by FactSet. The company now anticipates organic revenue growth of 9% to 10%, revising its earlier estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in attracting U.S. consumers, who are gravitating toward products that emphasize weight loss and healthier lifestyles. 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 multiple product recalls.