In the United States, consumer interest in weight loss drugs and non-alcoholic alternatives has led to a decline in soda purchases. Despite this trend, Coca-Cola announced strong second-quarter earnings, thanks in part to strong global demand for its beverages, prompting the company to raise its annual guidance.
Coca-Cola’s CEO, James Quincey, expressed optimism about the second-quarter results, noting solid growth in both revenue and operating income amid a shifting market landscape. However, the company reported a 1% drop in volume sales in North America during this period. Quincey attributed this decline to “softness in away-from-home channels,” which encompasses water, sports drinks, coffee, tea, and sodas.
The decrease in sales was partially mitigated by the success of Fairlife milk products and Coke itself, which were top performers in retail sales growth for the quarter. To counteract the drop, Coca-Cola is collaborating with fast-food chains to include its sodas in combo meal offerings. Notably, there are efforts with McDonald’s to enhance its $5 meal deal that features a soft drink.
Coca-Cola exceeded Wall Street expectations with reported revenue of $12.4 billion for the second quarter, translating to approximately $0.84 per share. Analysts had anticipated revenue of around $11.76 billion, or roughly $0.81 per share.
The company has revised its forecast for organic revenue growth, now expecting a range of 9% to 10%, up from the previous estimate of 8% to 9%.
In a similar vein, Pepsi is also facing challenges in attracting U.S. consumers who are increasingly focused on weight loss and healthier options. A Gallup poll indicates that young adults in the U.S. are consuming significantly less alcohol than in the past. In early July, Pepsi attributed its disappointing second-quarter performance to a series of product recalls.