In the United States, weight loss medications and non-alcoholic alternatives are leading consumers to hold back on soda purchases. Despite this trend, Coca-Cola reported strong earnings for the second quarter, driven by robust global demand for its beverages, which has prompted the company to increase its full-year guidance.
Coca-Cola CEO James Quincey expressed optimism about the company’s second-quarter performance, showcasing solid revenue and operating income growth amid a shifting market landscape. However, the beverage giant experienced a 1% decline in volume sales in North America during the quarter. Quincey attributed this decrease to a downturn in “away-from-home channels,” which encompasses water, sports drinks, coffee, tea, and soda.
The decline in soda sales was somewhat balanced by the success of Fairlife milk and Coca-Cola’s signature soda, which ranked highly in retail sales growth during the quarter. To mitigate the drop in soda consumption, the company is collaborating with restaurant chains to integrate its beverages into combo meals. Reports suggest Coca-Cola is working with McDonald’s to enhance its $5 meal deal, which includes a soft drink.
Overall, Coca-Cola exceeded Wall Street’s expectations, generating $12.4 billion in revenue during the second quarter, translating to approximately $0.84 per share. Analysts had predicted revenue of $11.76 billion, or about $0.81 per share. The company has revised its forecast for organic revenue growth to between 9% and 10%, an increase from its earlier forecast of 8% to 9%.
Pepsi, like Coca-Cola, is facing challenges in engaging U.S. consumers, who are increasingly favoring 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 multiple product recalls as a reason for its lackluster performance in the second quarter.