Coca-Cola is experiencing mixed results in the U.S. market amid changing consumer habits influenced by weight loss medications and non-alcoholic beverage options. Despite challenges, the beverage company reported strong second-quarter earnings on Tuesday, driven by significant global demand for its products, leading to a revised increase in its full-year guidance.
James Quincey, CEO of Coca-Cola, expressed optimism about the company’s second-quarter performance, highlighting solid growth in revenue and operating income. However, in North America, Coca-Cola faced a 1% decline in volume sales during the quarter. Quincey attributed this dip to decreased consumption in “away-from-home channels,” which encompass water, sports drinks, coffee, tea, and sodas.
The decline was somewhat mitigated by the success of its Fairlife milk brand and its flagship soda, Coke, which led retail sales growth during the period. To counteract the reduction in soda sales, Coca-Cola is collaborating with food chains to incorporate its beverages into combo meals, with efforts focused on enhancing McDonald’s $5 meal deal that includes a soft drink.
Despite the volume drop, Coca-Cola exceeded analysts’ expectations by reporting $12.4 billion in revenue for the second quarter, amounting to approximately $0.84 per share, surpassing the projected revenue of $11.76 billion.
Looking ahead, Coca-Cola has increased its forecast for organic revenue growth to a range of 9% to 10%, up from the previous estimate of 8% to 9%.
PepsiCo, like Coca-Cola, is also facing difficulties in capturing the interests of U.S. consumers, who are increasingly favoring healthier and weight-conscious products. A recent Gallup poll indicated a decline in alcohol consumption among young adults in the U.S. In early July, Pepsi acknowledged that a series of product recalls contributed to its lackluster performance in the second quarter.