In the United States, the rising popularity of weight loss medications and non-alcoholic beverages is leading consumers to hesitate in purchasing sodas.
Despite this trend, Coca-Cola reported strong second-quarter earnings, bolstered by significant global demand for its beverages, prompting the company to raise its full-year projections. CEO James Quincey expressed optimism about the results, noting solid growth in both revenue and operating income in a swiftly evolving market.
However, Coca-Cola experienced a 1% decline in volume sales in North America during the quarter. Quincey explained during the earnings call that the decrease was largely due to lower sales in “away-from-home” channels, which encompass products such as water, sports drinks, coffee, tea, and soda.
The company indicated that part of the revenue loss was mitigated by its Fairlife milk brand and its signature soft drink, Coke, which saw significant retail sales growth, ranking first and second, respectively, during the quarter.
To counteract the sales decline, Quincey revealed that Coca-Cola is collaborating with food chains to incorporate its soda into combo meal deals. Notably, they are working with McDonald’s to enhance the fast-food chain’s $5 meal deal, which includes a soft drink.
Overall, Coca-Cola surpassed Wall Street’s expectations, reporting $12.4 billion in revenue for the second quarter, equating to approximately $0.84 per share. Analysts had predicted revenues of $11.76 billion, or about $0.81 per share.
The company has now revised its forecast for organic revenue growth to between 9% and 10%, increasing its earlier estimate of 8% to 9%.
Pepsi, like Coca-Cola, is also facing challenges in retaining the interest of 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 underwhelming second-quarter performance to a series of product recalls.