Consumers in the U.S. are increasingly opting for weight loss drugs and non-alcoholic beverages, leading to a slowdown in soda purchases.
Despite this trend, Coca-Cola reported strong earnings for the second quarter, fueled by robust global demand for its products, prompting the company to enhance its full-year projections.
Coca-Cola’s CEO, James Quincey, expressed optimism about the results, stating, “We are encouraged with our second-quarter results, which delivered solid top-line and operating income growth in an ever-changing landscape.”
However, the company did see a 1% decline in volume sales within North America during the quarter. Quincey noted that this drop was attributed to “softness in away-from-home channels,” which encompasses various drink categories including water, sports drinks, coffee, tea, and soda.
This decline was somewhat mitigated by their Fairlife milk segment and their flagship soda, Coca-Cola, which performed well in retail sales growth. To counteract the decrease in sales, Quincey mentioned that Coca-Cola is collaborating with restaurants to include its soda in combo meals, particularly working with McDonald’s to enhance their $5 meal deal that includes a soft drink.
Ultimately, Coca-Cola exceeded Wall Street predictions, reporting $12.4 billion in revenue for the quarter, translating to approximately $0.84 per share, surpassing the estimated $11.76 billion and $0.81 per share forecasted by analysts.
The company has adjusted its expected organic revenue growth to between 9% and 10%, an increase from the prior range of 8% to 9%.
Similarly, Pepsi is grappling with challenges in capturing the attention of U.S. consumers, who are leaning towards products that support weight loss and healthier lifestyle choices. A Gallup poll revealed that young adults in the U.S. are consuming significantly less alcohol than in the past. In early July, Pepsi pointed to a series of recalls as a factor contributing to its lackluster performance in the second quarter.