Weight loss medications and a rise in non-alcoholic beverage options have led consumers in the U.S. to purchase fewer sodas. Despite this trend, Coca-Cola reported strong earnings for the second quarter, resulting in an increase in its full-year guidance due to strong global demand for its beverages.
Coca-Cola’s CEO, James Quincey, expressed optimism about the company’s performance, highlighting solid growth in topline and operating income during a challenging market environment. However, there was a 1% decline in volume sales in North America during the quarter. Quincey attributed this drop to weaker performance in “away-from-home channels,” which encompass various beverages including soda.
The decline in soda sales was somewhat balanced by the positive performance of Fairlife milk and Coca-Cola itself, which ranked first and second in retail sales growth for the quarter. To counteract the downturn, Coca-Cola is collaborating with restaurants to incorporate its sodas into combo meal offerings. Notably, the company is reportedly partnering with McDonald’s to enhance its $5 meal deal that includes a soft drink.
Coca-Cola exceeded Wall Street expectations by reporting revenues of $12.4 billion, translating to approximately $0.84 per share, compared to analysts’ forecasts of $11.76 billion, about $0.81 per share. As a result, the company has adjusted its organic revenue growth forecast to between 9% and 10%, an increase from the previous estimate of 8% to 9%.
Similarly, Pepsi has faced challenges in attracting U.S. consumers, who are prioritizing weight loss and healthier lifestyle choices. According to a Gallup poll, younger Americans are consuming less alcohol than they previously did. In early July, Pepsi pointed to a series of product recalls as a significant factor in its lackluster performance in the second quarter.