Consumers in the U.S. are increasingly opting for weight loss medications and non-alcoholic beverages, leading to a slowdown in soda sales. Despite this trend, Coca-Cola reported strong earnings for the second quarter, benefiting from a global demand for their beverage products and raising their full-year projections.
Coca-Cola’s CEO, James Quincey, expressed satisfaction with the company’s performance, highlighting the solid growth in both revenue and operating income amid a changing market. However, in North America, the volume of soda sales dipped by 1%, attributed to weaker performance in “away-from-home channels” that include their water, sports drinks, coffee, tea, and soda lines.
The decline in sales was partially compensated by the success of its Fairlife milk brand, as well as strong retail sales for Coca-Cola itself, which ranked first and second in retail growth for the quarter. To counteract the falling sales, the company is partnering with fast-food chains to integrate its sodas into combo meals. Reports indicate that Coca-Cola is working with McDonald’s to enhance its meal deals that offer a soft drink.
Coca-Cola outperformed Wall Street predictions, reporting revenue of $12.4 billion during the second quarter, equating to about $0.84 per share. Analysts had anticipated a revenue of $11.76 billion, or roughly $0.81 per share, according to FactSet. The company has revised its forecast for organic revenue growth to between 9% and 10%, up from a previous expectation of 8% to 9%.
Similarly, Pepsi has faced challenges in engaging U.S. consumers, who are increasingly gravitating towards weight loss and healthier lifestyle options. A recent Gallup poll indicates that young adults in the U.S. are consuming significantly less alcohol than in the past. Pepsi reported that its subdued second-quarter performance was affected by several product recalls earlier in July.