Consumers in the U.S. are holding back on soda purchases due to the rise of weight loss medications and the popularity of non-alcoholic options. Despite this trend, Coca-Cola reported strong second-quarter earnings, fueled by high global demand for its beverages, leading the company to raise its full-year guidance.
Coca-Cola’s CEO, James Quincey, expressed optimism about the company’s performance, stating, “We are encouraged with our second-quarter results, which delivered solid topline and operating income growth in an ever-changing landscape.”
However, the company saw a 1% decline in volume sales in North America for the quarter. Quincey explained during the earnings call that the decrease was largely due to “softness in away-from-home channels,” impacting water, sports drinks, coffee, tea, and soda products.
This decline was somewhat mitigated by growth in Fairlife milk and Coca-Cola’s flagship soda, which ranked first and second in retail sales growth. To combat slumping sales, Coca-Cola is collaborating with food chains to integrate its sodas into combo meals, specifically working with McDonald’s to enhance its $5 meal deal, which includes a soft drink.
Coca-Cola surpassed Wall Street expectations with $12.4 billion in revenue for the quarter, translating to about $0.84 cents per share. Analysts had anticipated revenue of $11.76 billion, or approximately $0.81 cents per share.
The company has revised its forecast for organic revenue growth upward, now estimating a range of 9% to 10%, compared to the previous guidance of 8% to 9%.
In a similar predicament, Pepsi is also facing challenges in capturing the interest of U.S. consumers, who are opting for products that emphasize weight loss and healthier choices. A Gallup poll indicates that young adults in the U.S. are drinking significantly less alcohol than before. Earlier this month, Pepsi attributed weaker performance in its second quarter to a series of product recalls.