Weight loss medications and non-alcoholic beverage options are causing U.S. consumers to reduce their soda purchases. Despite this trend, Coca-Cola reported strong second-quarter earnings, which were bolstered by high global demand for its beverages, prompting the company to increase its full-year forecast.
Coca-Cola CEO James Quincey expressed optimism about the company’s performance, stating, “We are encouraged with our second-quarter results, which delivered solid topline and operating income growth in an ever-changing landscape.” However, the company did see a 1% decline in volume sales within North America during the quarter. Quincey attributed this drop to “softness in away-from-home channels,” which encompass water, sports drinks, coffee and tea, alongside soda products.
The decline in volume was partially offset by the success of its Fairlife milk brand and Coke, which ranked first and second in retail sales growth for the quarter. To counter the sales dip, Coca-Cola is collaborating with restaurant chains to integrate its sodas into combo meal deals. There are reports that Coca-Cola is working with McDonald’s to enhance the value of its $5 meal deal, which includes a soft drink.
Overall, Coca-Cola’s earnings exceeded Wall Street’s expectations, with the company reporting $12.4 billion in revenue for the second quarter, equating to about $0.84 per share. Analysts anticipated revenue of $11.76 billion or roughly $0.81 per share.
Coca-Cola also raised its forecast for organic revenue growth, now predicting an increase of 9% to 10%, up from an earlier estimate of 8% to 9%.
In contrast, Pepsi is facing challenges in attracting U.S. consumers, who are increasingly favoring products aimed at weight loss and healthier lifestyles. A Gallup poll indicates that young adults in the U.S. are consuming significantly less alcohol than before. Additionally, in early July, Pepsi attributed its lackluster second-quarter performance to a number of product recalls.