Weight loss medications and non-alcoholic beverages are causing U.S. consumers to reduce their soda purchases. Despite this trend, Coca-Cola reported strong earnings for the second quarter, boosted by high global demand for its products, leading the company to raise its full-year outlook.
Coca-Cola’s CEO, James Quincey, expressed satisfaction with the company’s results, highlighting solid growth in revenue and operating income despite the evolving market conditions. However, in North America, Coca-Cola experienced a 1% decline in volume sales. Quincey attributed this decrease to weaker performance in away-from-home sales channels, which encompasses their beverages such as water, sports drinks, coffee, tea, and soda.
The sales drop was somewhat mitigated by the performance of Fairlife milk and Coke, which ranked highly in retail sales growth during this quarter. To counteract the declining volume, Coca-Cola is collaborating with fast food restaurants to integrate its sodas into combo meal offerings. Specifically, the company is reportedly assisting McDonald’s in enhancing its $5 meal deal that features a soft drink.
Despite these challenges, Coca-Cola exceeded Wall Street’s expectations, posting $12.4 billion in revenue, translating to approximately $0.84 per share. Analysts had projected revenue of around $11.76 billion and earnings of roughly $0.81 per share, according to FactSet.
The company also revised its forecast for organic revenue growth, increasing its estimate to between 9% and 10%, up from the previous range of 8% to 9%.
Similarly, Pepsi is facing challenges in capturing the interest of U.S. consumers, who are leaning towards products that emphasize weight loss and healthier lifestyles. Recent Gallup poll findings indicate a significant decline in alcohol consumption among young adults in the U.S. In early July, Pepsi reported that a series of product recalls contributed to its lackluster performance in the second quarter.