Consumers in the U.S. are increasingly hesitant to purchase sodas, influenced by weight loss medications and a rise in non-alcoholic alternatives.
Despite this trend, Coca-Cola reported strong earnings for the second quarter, driven by solid global demand for its beverages. This prompted the company to raise its guidance for the entire year.
James Quincey, CEO of Coca-Cola, 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, Coca-Cola experienced a 1% decline in volume sales in North America for the quarter. Quincey attributed this drop to weak performance in away-from-home channels, which encompasses water, sports drinks, coffee, tea, and sodas.
The decline in North America was partially mitigated by success from its Fairlife milk products and the continued popularity of its Coke brand, which saw significant retail sales growth.
To counteract the sales dip, Coca-Cola is collaborating with food chains to incorporate its sodas into combo meals. Reports suggest the company is working closely with McDonald’s to enhance its $5 meal deal that includes a soft drink.
Overall, Coca-Cola surpassed Wall Street’s expectations, reporting revenue of $12.4 billion for the second quarter, equating to approximately $0.84 per share. Analysts had predicted the company would generate about $11.76 billion in revenue, or roughly $0.81 per share, according to FactSet.
The company has now adjusted its forecast for organic revenue growth to between 9% and 10%, an increase from its earlier estimate of 8% to 9%.
Like Coca-Cola, Pepsi is also facing challenges in attracting U.S. consumers, who are leaning toward healthier options and weight loss products. A recent Gallup poll indicates young adults in the U.S. are consuming significantly less alcohol than before. Earlier in July, Pepsi attributed its subdued second-quarter results to a number of product recalls.