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, bolstered by solid global demand for its products, and has lifted its full-year guidance.
James Quincey, CEO of Coca-Cola, expressed optimism about the company’s quarterly performance, which showed significant growth in revenue and operating income amidst a changing market environment.
However, the North American division saw a 1% decline in volume sales for the quarter. Quincey attributed this decrease to a downturn in sales from away-from-home channels, which encompass water, sports drinks, coffee, tea, and soda. Nevertheless, the decline was mitigated by strong performances from Fairlife milk and Coca-Cola itself, which ranked first and second in retail sales growth, respectively.
To address the sales drop, Coca-Cola is collaborating with food chains to integrate its beverages into combo meal options. The company is reportedly working alongside McDonald’s to enhance its $5 meal deal, which includes a soda.
Overall, Coca-Cola exceeded Wall Street expectations, reporting $12.4 billion in revenue for the second quarter, equating to approximately $0.84 per share. Analysts had anticipated revenue of $11.76 billion, or about $0.81 per share.
The company has adjusted its forecast for organic revenue growth to between 9% and 10%, an increase from its earlier prediction of 8% to 9%.
Similarly, Pepsi is facing challenges in capturing the interest of U.S. consumers, who are increasingly opting for products aimed at weight loss and healthier lifestyles. A recent Gallup poll indicates that young adults in the U.S. are consuming significantly less alcohol than before. Earlier in July, Pepsi attributed its lackluster second-quarter performance to a series of product recalls.