In the United States, the rise of weight loss medications and non-alcoholic beverages has led to a decline in soda purchases. Despite this trend, Coca-Cola reported strong second-quarter earnings, fueled by significant global demand for its drinks, resulting in an upward revision of its full-year guidance.
Coca-Cola’s CEO, James Quincey, expressed optimism about the company’s second-quarter performance, highlighting considerable growth in both revenue and operating income in a shifting market.
However, the company experienced a 1% dip in volume sales in North America during the quarter. Quincey noted that this decline was largely due to weaker performance in “away-from-home” channels, which encompass categories such as water, sports drinks, coffee, tea, and traditional soda.
The drop in volume was somewhat mitigated by the success of Fairlife milk products and Coca-Cola’s flagship soda, which ranked first and second in terms of retail sales growth for the quarter.
To address the sales decline, Quincey mentioned that Coca-Cola is collaborating with food chains to integrate its sodas into combo meal offerings. The company is reported to be working alongside McDonald’s to enhance the appeal of its $5 meal deal, which includes a soft drink.
Coca-Cola surpassed Wall Street’s projections, posting $12.4 billion in revenue for the second quarter, equating to approximately $0.84 per share. Analysts had anticipated revenue of $11.76 billion, or roughly $0.81 per share.
As a result, Coca-Cola has updated its expectations for organic revenue growth, now forecasting between 9% and 10%, up from the previous estimate of 8% to 9%.
Similarly, Pepsi has faced challenges in attracting U.S. consumers, who are increasingly gravitating towards products that emphasize weight loss and healthier lifestyles. A Gallup poll indicates that young adults in the U.S. are consuming significantly less alcohol than before. In early July, Pepsi attributed its lackluster second-quarter performance to a series of product recalls.