Weight loss medications and non-alcoholic alternatives are causing a shift in consumer behavior, leading many in the United States to purchase fewer sodas. However, Coca-Cola reported strong second-quarter earnings, bolstered by global demand for its beverages, prompting the company to revise its full-year guidance upwards.
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.”
Despite this success, Coca-Cola experienced a 1% decline in volume sales in North America during the quarter. Quincey noted that the decrease in its U.S. division stemmed from “softness in away-from-home channels,” affecting water, sports drinks, coffee, tea, and soda products.
The volume drop was partly countered by growth in its Fairlife milk line and its flagship soda, Coca-Cola, which saw significant retail sales growth during the period. To further reinforce its market presence, Quincey revealed that Coca-Cola is collaborating with restaurants to include its sodas in combo meals, specifically working alongside McDonald’s to enhance its $5 meal deal that offers a soft drink.
Despite the challenges, Coca-Cola surpassed Wall Street expectations. The company reported $12.4 billion in revenue for the second quarter, equating to around $0.84 per share, compared to analyst predictions of $11.76 billion and approximately $0.81 per share.
Coca-Cola also updated its forecast for organic revenue growth, now expecting an increase between 9% and 10%, an improvement from its previous estimate of 8% to 9%.
In parallel, PepsiCo is facing difficulties capturing the interest of American consumers who are shifting towards healthier options and weight-loss products. A recent Gallup poll indicated that young adults in the U.S. are consuming significantly less alcohol than in the past. Pepsi reported a subdued second quarter, attributing some of its struggles to a series of product recalls.