Weight loss medications and non-alcoholic alternatives are causing American consumers to rethink their soda purchases. Despite this trend, Coca-Cola announced solid earnings for the second quarter, attributed to strong global demand for its beverages, leading the company to raise its full-year forecast.
Coca-Cola CEO James Quincey expressed optimism about the company’s performance, highlighting “solid topline and operating income growth” amidst challenging market conditions. However, North America saw a 1% decline in volume sales during the quarter, largely due to a drop in sales from “away-from-home channels,” which includes water, sports drinks, coffee, tea, and soda products.
The decline was somewhat mitigated by sales from Fairlife milk and Coca-Cola, which achieved top rankings in retail sales growth for the quarter. To combat ongoing sales challenges, Coca-Cola is partnering with food chains to integrate its sodas into combo meals. Notably, discussions with McDonald’s are underway to enhance the fast-food chain’s $5 meal deal that includes a soft drink.
Coca-Cola surpassed Wall Street’s expectations with revenue of $12.4 billion, translating to approximately $0.84 per share. Analysts had predicted revenue of $11.76 billion, or roughly $0.81 per share. As a result, Coca-Cola adjusted its forecast for organic revenue growth to between 9% and 10%, up from an earlier estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in regaining consumer interest in the U.S. market, where health-conscious choices are becoming more popular. A recent Gallup poll indicates that younger Americans are consuming significantly less alcohol. In early July, Pepsi attributed its lackluster second-quarter performance to a series of product recalls.