In the United States, the rise of weight loss medications and non-alcoholic beverage options are causing consumers to rethink their soda purchases. Despite this trend, Coca-Cola announced strong earnings for the second quarter, fueled by global demand for its products. As a result, the company has updated its full-year guidance upward.
James Quincey, CEO of Coca-Cola, expressed optimism about the company’s performance, stating, “We are encouraged with our second-quarter results, which delivered solid topline and operating income growth in an ever-changing landscape.”
However, Coca-Cola did report a 1% decline in volume sales in North America during the quarter. Quincey attributed this drop to weaknesses in away-from-home channels, which encompass water, sports drinks, coffee, tea, and soda offerings. Nonetheless, the decrease was partially countered by growth in its Fairlife milk brand and its flagship soda, Coke, which ranked first and second in retail sales growth for the quarter.
In response to the sales decline, Coca-Cola is collaborating with fast food restaurants to incorporate its sodas into combo meals, with efforts noted to enhance McDonald’s $5 meal deal that includes a soft drink.
Overall, Coca-Cola surpassed Wall Street projections, reporting revenues of $12.4 billion for the second quarter, equating to approximately $0.84 per share. Analysts had anticipated revenues of $11.76 billion, or about $0.81 per share, according to data from FactSet.
The company has also revised its forecast for organic revenue growth to between 9% and 10%, increasing its previous estimate of 8% to 9%.
Similarly, Pepsi is grappling with challenges in attracting American consumers, who are increasingly opting for products focused on weight loss and healthier lifestyles. A recent Gallup poll highlights that young adults in the U.S. are drinking significantly less alcohol than before. In early July, Pepsi cited a series of product recalls as a factor contributing to its lackluster performance in the second quarter.