Consumers in the U.S. are increasingly avoiding sodas, influenced by the popularity of weight loss drugs and non-alcoholic alternatives. Despite this trend, Coca-Cola reported strong earnings for the second quarter, supported by robust global demand for its products, leading the beverage company to revise its full-year guidance upwards.
CEO James Quincey expressed optimism about the company’s second-quarter performance, highlighting solid revenue and operating income growth amid changing market conditions.
Nevertheless, Coca-Cola experienced a 1% decline in volume sales in North America for the quarter. Quincey attributed this decrease to a slump in “away-from-home channels,” which include beverages like water, sports drinks, coffee, tea, and soda. However, this decline was somewhat mitigated by the success of Fairlife milk and the Coca-Cola brand itself, which ranked first and second in retail sales growth.
To counteract the drop in sales, Coca-Cola is collaborating with food chains to incorporate its sodas into combo meal offerings. Reports indicate that the company is partnering with McDonald’s to enhance the fast-food chain’s $5 meal deal, which includes a soft drink.
Coca-Cola surpassed Wall Street expectations with second-quarter revenues of $12.4 billion, translating to approximately $0.84 per share. Analysts had predicted revenues of around $11.76 billion, or about $0.81 per share.
The company has adjusted its forecast for organic revenue growth to between 9% and 10%, an increase from its previous estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in appealing to U.S. consumers, who are leaning towards products that emphasize weight loss and healthier lifestyles. A Gallup poll indicates a significant decline in alcohol consumption among young adults in the U.S. In early July, Pepsi attributed its lackluster second-quarter results to several product recalls.