Consumer trends have shifted in the U.S. as weight loss drugs and non-alcoholic alternatives prompt many to reduce soda consumption.
Despite these challenges, Coca-Cola reported strong second-quarter earnings, bolstered by high global demand for its beverage offerings, leading the company to raise its full-year outlook. CEO James Quincey expressed optimism about the company’s performance, which showed solid revenue and operating income growth amid a changing market.
However, Coca-Cola experienced a 1% drop in volume sales in North America during the quarter. Quincey attributed this decline to softness in away-from-home channels, which encompass various products including water, sports drinks, coffee, tea, and soda. This downturn was somewhat mitigated by growth in sales of Fairlife milk and Coke, both of which ranked highly in retail sales growth.
To counteract declining soda sales, Coca-Cola is collaborating with food chains to include its beverages in combo meals, such as a partnership with McDonald’s to enhance its $5 meal deal offering with a soft drink.
Overall, Coca-Cola exceeded Wall Street expectations in the second quarter, reporting $12.4 billion in revenue, translating to $0.84 per share, compared to the anticipated $11.76 billion and roughly $0.81 per share.
Additionally, the company has revised its forecast for organic revenue growth, now predicting an increase of between 9% and 10%, up from the previous estimate of 8% to 9%.
Pepsi is facing similar challenges in attracting U.S. consumers, who are gravitating towards products that emphasize weight loss and healthier lifestyles. Recent polling has shown a notable decline in alcohol consumption among young adults in the U.S. In early July, Pepsi cited several product recalls as a factor in its lackluster second-quarter performance.