Weight loss medications and non-alcoholic beverage options are leading American consumers to reduce their soda purchases. Despite this trend, Coca-Cola reported strong second-quarter earnings on Tuesday, fueled by global demand for its beverages. This success prompted the company to increase its full-year forecast.
Coca-Cola CEO James Quincey expressed optimism about the quarterly results, noting solid growth in revenue and operating income despite changing market conditions.
However, the company’s volume sales in North America fell by 1% during the quarter. Quincey pointed to weaknesses in “away-from-home channels,” which encompass water, sports drinks, coffee, tea, and soda sales. Nonetheless, this decline was somewhat mitigated by the popularity of Fairlife milk and a strong performance from Coca-Cola itself, which ranked first and second in retail sales growth respectively.
To combat the volume drop, Quincey mentioned ongoing collaborations with food chains to include Coca-Cola products in combo meals. Specifically, efforts are being made with McDonald’s to enhance the appeal of their $5 meal deal, which includes a soft drink.
Coca-Cola exceeded analysts’ expectations by generating $12.4 billion in revenue during the second quarter, translating to approximately $0.84 per share. This performance surpassed the anticipated revenue of $11.76 billion, or around $0.81 per share.
The company now forecasts an organic revenue growth rate of 9% to 10%, up from its prior estimate of 8% to 9%.
Similarly, PepsiCo is facing challenges in engaging American consumers who are increasingly focused on weight loss and healthier lifestyles. Evidence from a recent Gallup poll suggests that young adults in the U.S. are consuming significantly less alcohol than in previous years. In early July, Pepsi attributed its lackluster second-quarter performance to several product recalls.