Consumers in the U.S. are increasingly delaying soda purchases, influenced by the rise of weight loss medications and non-alcoholic drink alternatives. Despite this trend, Coca-Cola reported strong earnings for the second quarter, fueled by significant global demand for its beverages, prompting the company to revise its full-year projections upwards.
Coca-Cola’s CEO, James Quincey, expressed optimism about the company’s performance, noting growth in both top-line revenue and operating income in a rapidly evolving market. However, the company experienced a 1% decline in volume sales in North America during the quarter. Quincey attributed this drop to weakened sales in “away-from-home channels,” which encompasses its various products, including water, sports drinks, coffee, tea, and sodas.
The decline was somewhat mitigated by sales from Fairlife milk and the popularity of Coca-Cola’s flagship soda, which ranked first and second in retail sales growth for the quarter. To counteract the drop in sales, Coca-Cola is collaborating with food chains to integrate its sodas into combo meal offerings. Reports suggest that the beverage company is working with McDonald’s to enhance the $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 about $0.84 per share. Analysts had predicted revenue of $11.76 billion, or approximately $0.81 per share, according to FactSet.
The company has revised its forecast for organic revenue growth to a range of 9% to 10%, up from the earlier estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in capturing the interest of U.S. consumers, who are increasingly gravitating towards products that support weight loss and healthier lifestyles. A Gallup poll indicates that young adults in the U.S. are consuming significantly less alcohol than in the past. In early July, Pepsi cited several product recalls as a factor contributing to its lackluster performance in the second quarter.