In the United States, the rise of weight loss medications and non-alcoholic beverage options is leading consumers to reduce their soda consumption.
Despite this trend, Coca-Cola reported strong earnings for the second quarter, fueled by robust global demand for its products, allowing the company to raise its full-year guidance. CEO James Quincey expressed optimism about the company’s performance, highlighting solid growth in revenue and operating income amidst a shifting market environment.
However, Coca-Cola faced a 1% decline in volume sales in North America for the quarter. Quincey noted that this decline was primarily due to reduced sales in away-from-home channels, which encompass water, sports drinks, coffee, tea, and sodas.
The drop in sales was somewhat mitigated by the success of Fairlife milk and its flagship soda, Coca-Cola, which performed well in retail sales growth. To address the sales slump, Quincey indicated that the company is collaborating with restaurant chains to integrate drinks into meal combos, with McDonald’s being a particular focus to enhance its $5 meal deal that includes a soft drink.
Overall, Coca-Cola exceeded Wall Street expectations, reporting second-quarter revenues of $12.4 billion, equating to approximately $0.84 per share. Analysts had projected revenues of $11.76 billion, or about $0.81 per share.
The company also revised its forecast for organic revenue growth, now expecting between 9% and 10%, an increase from its earlier estimate of 8% to 9%.
Similarly, Pepsi is encountering challenges in capturing the interest of American consumers, who are increasingly opting for healthier alternatives and weight loss-focused products. A Gallup poll revealed a significant reduction in alcohol consumption among young adults in the U.S. In early July, Pepsi attributed its lackluster second-quarter performance to a series of product recalls.