Consumers in the U.S. are becoming more cautious about purchasing sodas, influenced by the popularity of weight loss medications and non-alcoholic beverage options.
Despite this trend, Coca-Cola reported strong earnings for the second quarter on Tuesday, bolstered by healthy global demand for its products. As a result, the beverage company has raised its projections for the year.
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’s volume sales in North America experienced a 1% decline during the quarter. Quincey explained during the earnings call that the decrease in the U.S. market was attributed to “softness in away-from-home channels,” which encompass its water, sports drinks, coffee, tea, and soda products.
The dip in sales was somewhat compensated by the success of its Fairlife milk brand and Coca-Cola’s soft drink, which achieved strong retail sales growth, ranking first and second respectively.
To counteract the volume decline, Quincey mentioned that Coca-Cola is collaborating with food chains to incorporate its sodas into combo meals. Notably, the company is working with McDonald’s to enhance its $5 meal deal that includes a soft drink.
Overall, Coca-Cola surpassed analysts’ expectations, reporting $12.4 billion in revenue or about $0.84 per share, compared to the anticipated $11.76 billion and roughly $0.81 per share, according to FactSet.
Coca-Cola has also raised its forecast for organic revenue growth to between 9% and 10%, an increase from its earlier estimate of 8% to 9%.
Similarly, Pepsi has faced challenges in appealing to U.S. consumers who are increasingly opting for weight loss and healthier lifestyle products. A Gallup poll indicates 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 to a series of recalls.