Recent trends in weight loss medications and the preference for non-alcoholic beverages are causing a decline in soda purchases among U.S. consumers. Despite this, Coca-Cola reported strong second-quarter earnings on Tuesday, bolstered by high global demand for its products, leading the company to raise its annual forecasts.
Coca-Cola’s CEO, James Quincey, expressed optimism, stating, “We are encouraged with our second-quarter results, which delivered solid topline and operating income growth in an ever-changing landscape.”
However, sales volume in North America saw a 1% decline this quarter. Quincey attributed this drop to “softness in away-from-home channels,” which encompasses their water, sports drinks, coffee, tea, and soda products.
To mitigate the decline, Coca-Cola highlighted that its Fairlife milk and Coke itself performed well in retail sales growth, ranking first and second for the quarter. Quincey also mentioned ongoing collaborations with food chains, including McDonald’s, to incorporate Coke into meal deals, aiming to enhance appeal amid declining sales.
Coca-Cola surpassed Wall Street expectations, reporting revenues of $12.4 billion for the second quarter, translating to roughly $0.84 per share, compared to the forecasted $11.76 billion and $0.81 per share.
The company now anticipates organic revenue growth of 9% to 10%, an increase from its earlier estimate of 8% to 9%.
Similarly, Pepsi is encountering challenges in engaging U.S. consumers who are increasingly drawn toward weight loss-oriented products and healthier lifestyle choices. A Gallup poll has also shown that younger adults in the U.S. are drinking significantly less alcohol. Earlier in July, Pepsi attributed its lackluster second quarter to a series of product recalls.