Consumers in the U.S. are increasingly holding off on purchasing sodas, influenced by the availability of weight loss drugs and non-alcoholic alternatives.
Despite this trend, Coca-Cola reported strong second-quarter earnings on Tuesday, attributed in part to robust global demand for its beverage offerings, prompting the company to adjust its full-year revenue outlook upward.
Coca-Cola’s CEO, James Quincey, expressed satisfaction with the company’s second-quarter performance, noting solid growth in both sales and operating income amidst an evolving market landscape.
However, North America saw a 1% decline in volume sales during the quarter. Quincey explained in an earnings call that this decline was largely due to decreased sales in “away-from-home channels,” which encompass water, sports drinks, coffee, tea, and sodas.
This decline was somewhat mitigated by the popularity of Fairlife milk and Coca-Cola’s flagship soda, which ranked first and second in retail sales growth for the quarter.
To counter the volume dip, Quincey mentioned that Coca-Cola is collaborating with food chains to incorporate its beverages into combo meal offers. Notably, the company is working alongside McDonald’s to enhance the fast-food giant’s $5 meal deal that includes a soft drink.
Overall, Coca-Cola exceeded Wall Street’s expectations, reporting second-quarter revenues of $12.4 billion, or approximately $0.84 per share. Analysts had projected revenues of around $11.76 billion, or roughly $0.81 per share, according to FactSet.
The company has now raised its forecast for organic revenue growth to between 9% and 10%, a revision from the previous estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in engaging U.S. consumers who are shifting towards products that emphasize weight loss and healthier lifestyles. A Gallup poll indicates a significant decline in alcohol consumption among young adults in the U.S. In early July, Pepsi attributed its lackluster second-quarter performance to a series of product recalls.