In the U.S., growing interest in weight loss drugs and non-alcoholic beverages is leading consumers to reduce their soda purchases.
Despite this trend, Coca-Cola announced strong second-quarter earnings, bolstered by robust global demand for its beverages, prompting the company to raise its full-year guidance. CEO James Quincey expressed optimism about the company’s performance, highlighting “solid topline and operating income growth in an ever-changing landscape.”
However, Coca-Cola experienced a 1% decline in volume sales in North America during the same quarter, attributed to weakened performance in “away-from-home channels,” which encompass its water, sports drinks, coffee, tea, and soda products. The decline was partially mitigated by increased sales from its Fairlife milk and Coca-Cola soda, both of which ranked high in retail sales growth.
To counterbalance the downturn, Quincey indicated that Coca-Cola is collaborating with fast-food chains to integrate its sodas into combo meals. Notably, they are working with McDonald’s to enhance the appeal of the fast food chain’s $5 meal deal, which includes a soft drink.
Overall, Coca-Cola exceeded Wall Street’s expectations for the second quarter, reporting $12.4 billion in revenue, equating to about $0.84 per share. Analysts had anticipated the company to generate approximately $11.76 billion in revenue, or around $0.81 per share.
Looking ahead, Coca-Cola has adjusted its forecast for organic revenue growth to between 9% and 10%, up from its prior estimate of 8% to 9%.
Similar challenges are being faced by Pepsi, which is also struggling to capture the attention of health-conscious U.S. consumers. According to a Gallup poll, young adults are notably consuming less alcohol than in the past. In July, Pepsi attributed its weak second-quarter performance to a series of product recalls.