Consumers in the U.S. are increasingly holding off on soda purchases due to the rise of weight loss drugs and non-alcoholic options. Despite this trend, Coca-Cola reported strong earnings for the second quarter, buoyed by robust global demand for its beverages, which led the company to raise its full-year expectations.
Coca-Cola’s CEO, James Quincey, expressed optimism about the company’s second-quarter performance, noting solid growth in both top-line revenue and operating income amid changing market conditions. However, the North American market faced a slight decline in volume sales, falling 1% during the quarter. Quincey attributed this drop to “softness in away-from-home channels,” which includes products like water, sports drinks, coffee, tea, and sodas.
The decline in North American soda sales was somewhat mitigated by the success of Coca-Cola’s Fairlife milk brand, along with strong performance from its flagship beverage, Coke, which ranked first and second in retail sales growth during the quarter.
In a bid to reverse the sales decline, Coca-Cola is collaborating with food chains to incorporate its beverages into combo meals. Notably, the company is working with McDonald’s to enhance the fast-food chain’s $5 meal deal, which includes a soft drink.
Overall, Coca-Cola’s performance exceeded Wall Street expectations, with the company reporting $12.4 billion in revenue for the second quarter, translating to approximately $0.84 per share. Analysts had predicted revenue of around $11.76 billion, or roughly $0.81 per share.
Additionally, Coca-Cola has revised its forecast for organic revenue growth, now anticipating an increase of between 9% and 10%, compared to its earlier projection of 8% to 9%.
Like Coca-Cola, Pepsi is facing challenges in attracting U.S. consumers, who are increasingly gravitating towards products that emphasize weight loss and healthier lifestyles. A Gallup poll indicates that young adults in the U.S. are consuming significantly less alcohol than before. Earlier in July, Pepsi cited a series of product recalls as a reason for its lackluster second-quarter results.