Weight loss medications and non-alcoholic beverage options are leading consumers in the U.S. to reduce their soda purchases. Despite this trend, Coca-Cola reported strong earnings for the second quarter, bolstered by high global demand for its products, which prompted the company to revise its full-year guidance upward.
Coca-Cola’s CEO, James Quincey, expressed optimism about the company’s performance, noting significant growth in revenue and operating income in a fluctuating market. However, the company’s North American volume sales dropped by 1% during the quarter. Quincey attributed this decline to a slowdown in sales through “away-from-home channels,” which encompass its offerings in water, sports drinks, coffee, tea, and soda.
The decrease in sales was somewhat balanced by the performance of its Fairlife milk products and its flagship soda, Coke, which ranked first and second in retail sales growth, respectively. To counteract the dip in sales, Coca-Cola is collaborating with food chains to include its sodas in combo meals. Reports indicate that the company is working with McDonald’s to revitalize the fast-food chain’s $5 meal deal, which includes a beverage.
Coca-Cola surpassed analysts’ expectations, reporting $12.4 billion in revenue for the second quarter, translating to approximately $0.84 per share. This performance exceeded Wall Street’s forecast of around $11.76 billion in revenue, or $0.81 per share.
The company now projects organic revenue growth to be between 9% and 10%, increasing its earlier estimate of 8% to 9%.
Similarly, Pepsi 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 attributed its lackluster second-quarter performance to a series of product recalls.