Consumers in the U.S. are increasingly refraining from purchasing sodas, partly due to the rise of weight loss medications and non-alcoholic alternatives. Despite this trend, Coca-Cola reported strong earnings for the second quarter, attributing this success to robust global demand for its beverage products. The company announced an increase in its full-year guidance.
Coca-Cola CEO James Quincey expressed optimism about the quarterly results, highlighting growth in both revenue and operating income amid changing market conditions. However, the company observed a 1% decline in volume sales in North America during this period. Quincey mentioned that the decrease was primarily linked to lower performance in away-from-home channels, which encompasses its offerings in water, sports drinks, coffee, tea, and sodas.
To mitigate the impact of this dip, Coca-Cola noted the positive contributions of its Fairlife milk line and its flagship soda, Coke, which ranked first and second in retail sales growth, respectively. Additionally, Quincey stated that Coca-Cola is collaborating with food chains to integrate its soda into combo meals, specifically working with McDonald’s to enhance the fast food chain’s $5 meal deal that includes a soft drink.
Overall, Coca-Cola exceeded Wall Street forecasts, reporting $12.4 billion in revenue for the quarter, translating to approximately $0.84 per share. Analysts had anticipated revenues of around $11.76 billion, or about $0.81 a share. The company also revised its forecast for organic revenue growth, now estimating it will fall between 9% and 10%, an increase from its earlier prediction of 8% to 9%.
Pepsi, similarly, has faced challenges in appealing to U.S. consumers, who are shifting towards healthier products and weight loss-focused options. A Gallup poll has also indicated that young adults in the U.S. are consuming significantly less alcohol than before. In addition, Pepsi attributed its subdued second-quarter performance to a series of product recalls experienced earlier in July.