Consumers in the U.S. are increasingly turning to weight loss drugs and non-alcoholic alternatives, leading to a slowdown in soda purchases. Despite this trend, Coca-Cola reported strong second-quarter earnings, buoyed by robust global demand for its beverage offerings, prompting the company to increase its full-year forecasts.
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’s North American volume sales saw a 1% decline during the quarter. Quincey noted that this drop was primarily due to “softness in away-from-home channels,” which encompasses water, sports drinks, coffee and tea, and soda options. This decline was partially balanced by gains from the Fairlife milk brand and Coca-Cola’s flagship soda, which ranked first and second for retail sales growth in the quarter.
To mitigate the volume decrease, Quincey revealed that Coca-Cola is collaborating with food chains to integrate its products into combo meals, including discussions to enhance McDonald’s $5 meal deal that features a soft drink.
Overall, Coca-Cola surpassed Wall Street expectations, reporting revenue of $12.4 billion, translating to about $0.84 per share, compared to analysts’ predictions of $11.76 billion and approximately $0.81 per share, as per FactSet.
Looking ahead, Coca-Cola now anticipates organic revenue growth of 9% to 10%, raising its previous estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in attracting U.S. consumers, who are opting for healthier products and focusing on weight loss. A decline in alcohol consumption among young adults has also been noted, with a recent Gallup poll reflecting this change. Earlier in July, Pepsi attributed its lackluster second-quarter results to multiple product recalls.