Consumers in the U.S. are increasingly avoiding sodas, influenced by the rise of weight loss drugs and non-alcoholic options.
Despite this trend, Coca-Cola announced strong earnings for the second quarter, thanks to robust global demand for its beverages, leading the company to raise its full-year guidance.
Coca-Cola’s CEO, James Quincey, expressed satisfaction with the company’s performance, highlighting significant top-line and operating income growth in a rapidly changing market.
However, in North America, the company experienced a 1% decline in volume sales during the quarter. Quincey attributed this drop to decreased sales in “away-from-home channels,” which encompasses its portfolio of water, sports drinks, coffee, tea, and sodas.
The dip in volume sales was partially offset by its Fairlife milk brand and strong sales for Coca-Cola. The company ranked first and second in retail sales growth for these products during the quarter.
To counteract the decline in soda sales, Quincey noted that Coca-Cola is partnering with fast-food chains to include its beverages in combo meals. For instance, the company is collaborating with McDonald’s to enhance the appeal of its $5 meal deal, which includes a soda.
Overall, Coca-Cola surpassed 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 $11.76 billion, or roughly $0.81 per share.
Moreover, Coca-Cola has raised its forecast for organic revenue growth to between 9% and 10%, an increase from its previous estimate of 8% to 9%.
Similarly, Pepsi has faced challenges in attracting U.S. consumers who are increasingly opting for weight loss and health-focused products. Young adults in the U.S. are also drinking less alcohol, as indicated by a Gallup poll. In early July, Pepsi cited multiple recalls as a reason for its less-than-stellar second-quarter performance.