U.S. consumers are increasingly delaying soda purchases, influenced by the rise of weight loss drugs and non-alcoholic beverage options.
Despite this trend, Coca-Cola reported strong earnings for the second quarter on Tuesday, fueled by a high global demand for its beverages, prompting the company to increase its forecast for the year. CEO James Quincey expressed optimism about the company’s performance, highlighting solid growth in revenue and operating income in a fluctuating market.
However, in North America, Coca-Cola experienced a 1% decline in volume sales during the quarter. Quincey noted that the drop in the U.S. market was linked to weaker sales in “away-from-home channels,” which encompass its water, sports drinks, coffee, tea, and soda products.
The decline was somewhat mitigated by the popularity of Fairlife milk and Coca-Cola, which ranked first and second in retail sales growth for the quarter. Quincey mentioned that Coca-Cola is collaborating with fast-food chains to incorporate its sodas into combo meals, including initiatives with McDonald’s to bolster its $5 meal deal that includes a soda.
Overall, Coca-Cola surpassed Wall Street’s expectations, reporting $12.4 billion in revenue during the second quarter, equating to around $0.84 per share, exceeding forecasts of $11.76 billion and $0.81 per share.
The company now projects organic revenue growth of 9% to 10%, raising its earlier estimate of 8% to 9%.
Similarly, Pepsi has faced challenges in attracting U.S. consumers, who are increasingly opting for health-focused products and reducing alcohol consumption, as reported by a Gallup poll. In early July, Pepsi attributed its lackluster second-quarter performance to a series of product recalls.