Concerns about weight loss medications and an increase in non-alcoholic beverage choices are leading U.S. consumers to pause their soda purchases. Despite this trend, Coca-Cola reported strong earnings for the second quarter, which were bolstered by robust global demand for its products, allowing the company to raise its full-year guidance.
Coca-Cola CEO James Quincey expressed optimism about the company’s performance, highlighting solid growth in revenue and operating income amid a changing market environment. However, volume sales in North America decreased by 1%. Quincey attributed the decline to “softness in away-from-home channels,” which encompass its beverages including water, sports drinks, coffee, tea, and sodas.
The company noted that this decline was somewhat countered by its Fairlife milk brand and its flagship Coca-Cola product, which saw significant retail sales growth. To further address this volume decline, Coca-Cola is collaborating with food chains, including McDonald’s, to integrate its soda into combo meal offerings, such as the $5 meal deal that includes a soft drink.
Overall, Coca-Cola’s performance exceeded Wall Street expectations, with the company reporting $12.4 billion in revenue for the second quarter, translating to earnings of approximately $0.84 per share, surpassing the anticipated $11.76 billion in revenue and $0.81 per share earnings forecasted by analysts.
Additionally, Coca-Cola revised its forecast for organic revenue growth to between 9% and 10%, an increase from its earlier estimate of 8% to 9%.
Similarly, PepsiCo is facing challenges in attracting U.S. consumers who are gravitating towards healthier options and prioritizing weight loss. Recent polling data indicates that young adults in the U.S. are consuming significantly less alcohol than in previous years. In July, Pepsi highlighted a series of product recalls as a factor in its lackluster second-quarter performance.