Weight loss medications and non-alcoholic beverages have led many U.S. consumers to curb soda purchases. Despite this trend, Coca-Cola announced strong second-quarter earnings, benefiting from robust global demand for its carbonated drinks, which allowed the company to raise its full-year expectations.
Coca-Cola’s CEO, James Quincey, expressed optimism about the company’s second-quarter performance, highlighting solid growth in both revenue and operating income amidst shifting market conditions.
However, the North American market saw a 1% drop in volume sales. Quincey pointed out that this decline was primarily due to weaknesses in channels where beverages are sold outside of homes, which include water, sports drinks, coffee, tea, and sodas.
The decrease in volume sales was somewhat mitigated by the success of Fairlife milk and Coca-Cola’s flagship product, which ranked first and second in retail sales growth for the quarter.
To counteract the volume drop, Coca-Cola is collaborating with restaurant chains to integrate its sodas into combo meals, notably working with McDonald’s to enhance its $5 meal deal that includes a soft drink.
Coca-Cola’s performance exceeded analyst expectations, reporting $12.4 billion in revenue for the second quarter, equating to approximately $0.84 per share. Analysts had anticipated about $11.76 billion in revenue, or roughly $0.81 per share.
The company has adjusted its forecast for organic revenue growth to between 9% and 10%, improving from its previous projection of 8% to 9%.
Similarly, Pepsi has faced challenges in engaging U.S. consumers who are increasingly focusing on healthier lifestyles and weight loss. This shift in consumer behavior is reflected in a Gallup poll indicating that young adults in the U.S. are consuming significantly less alcohol than before. Pepsi’s subdued performance in the second quarter was attributed to a series of product recalls.