Consumers in the U.S. are delaying soda purchases due to the popularity of weight loss medications and non-alcoholic alternatives. Despite this trend, Coca-Cola reported strong earnings for the second quarter, fueled by global demand for its beverages, leading the company to raise its projections for the year.
Coca-Cola CEO James Quincey expressed optimism about the company’s performance, highlighting solid growth in revenue and operating income amid changing market conditions. However, the company’s volume sales in North America saw a 1% decline during the quarter. Quincey attributed this slump to reduced sales in away-from-home channels, including water, sports drinks, coffee, tea, and sodas.
The decline in soda sales was somewhat mitigated by the success of Fairlife milk and Coca-Cola’s flagship soda, which ranked high in retail sales growth. To counteract the downturn, Quincey noted that Coca-Cola is collaborating with fast food chains to incorporate its drinks into meal deals, particularly partnering with McDonald’s to enhance its $5 meal option, which includes a soft drink.
Coca-Cola’s revenue for the second quarter reached $12.4 billion, surpassing Wall Street expectations of $11.76 billion. The company reported earnings of approximately $0.84 per share, compared to an anticipated $0.81.
Looking ahead, Coca-Cola has revised its forecast for organic revenue growth to a range of 9% to 10%, an increase from its earlier estimate of 8% to 9%.
Pepsi, like Coca-Cola, faces challenges as U.S. consumers increasingly favor products associated with weight loss and healthier lifestyles. A recent Gallup poll indicated that young adults in the U.S. are consuming less alcohol, and in July, Pepsi cited several product recalls for its less than impressive second-quarter results.