Weight loss medications and non-alcoholic alternatives are leading U.S. consumers to reduce their soda purchases. Despite this trend, Coca-Cola announced strong second-quarter earnings, attributing part of its success to heightened global demand for its beverages, which resulted in an upward adjustment of its full-year forecast.
Coca-Cola CEO James Quincey expressed optimism about the company’s performance, noting solid revenue and operating income growth amid shifting market conditions. However, the company reported a 1% decline in volume sales in North America during the quarter, largely due to a decrease in purchases from away-from-home venues encompassing water, sports drinks, coffee, tea, and sodas.
The decline was countered somewhat by robust sales of its Fairlife milk products and its flagship soda, Coke, which ranked first and second in retail sales growth for the quarter. To further mitigate the loss, Coca-Cola is collaborating with fast-food chains to integrate its sodas into combo meals. Reports indicate a partnership with McDonald’s aimed at enhancing the fast-food chain’s $5 meal deal, which includes a soft drink.
Despite the challenges, Coca-Cola surpassed Wall Street expectations by reporting $12.4 billion in revenue for the second quarter, translating to approximately $0.84 per share, compared to the anticipated $11.76 billion and $0.81 per share.
The company has revised its projection for organic revenue growth to between 9% and 10%, an increase from its previous estimate of 8% to 9%.
Pepsi, similarly, faces challenges in gaining traction with U.S. consumers as they increasingly lean towards products focused on health and weight loss. This trend is bolstered by findings from a Gallup poll that indicate a significant reduction in alcohol consumption among young adults in the U.S. Earlier in July, Pepsi attributed its lackluster second-quarter results to a series of product recalls.