Americans are increasingly turning to weight loss medications and non-alcoholic options, which is affecting soda sales in the U.S. Despite this trend, Coca-Cola reported strong second-quarter earnings, driven by high global demand for its beverages. The company raised its full-year guidance due to its performance.
Coca-Cola’s CEO, James Quincey, expressed optimism about the company’s results, highlighting solid revenue and operating income growth in a changing market. However, in North America, Coca-Cola experienced a 1% decline in volume sales during the quarter. Quincey attributed this decrease to lower sales in “away-from-home channels,” which encompass beverages like water, sports drinks, coffee, tea, and soda.
The decline was partially mitigated by sales from Fairlife milk and Coca-Cola’s flagship soda, which ranked highly in retail sales growth. To address the volume drop, Quincey mentioned efforts to integrate Coca-Cola products into combo meals at fast food restaurants. Notably, the company is collaborating with McDonald’s to enhance its $5 meal deal that includes a soft drink.
Despite the mixed sales results, Coca-Cola exceeded Wall Street expectations, reporting $12.4 billion in revenue for the second quarter, equating to approximately $0.84 per share. Analysts had anticipated revenue of about $11.76 billion or $0.81 per share. The company also revised its forecast for organic revenue growth to a range of 9% to 10%, an increase from its previous expectation of 8% to 9%.
Pepsi, on the other hand, is also facing challenges as U.S. consumers gravitate towards health-focused products. A Gallup poll indicates a significant reduction in alcohol consumption among young adults in the U.S. In early July, Pepsi attributed its lackluster second quarter to a series of product recalls.