Weight loss medications and non-alcoholic beverages are prompting American consumers to refrain from purchasing sodas, yet Coca-Cola reported strong second-quarter earnings on Tuesday, bolstered by high global demand for its beverages, leading the company to revise its full-year forecasts upward.
Coca-Cola’s CEO, James Quincey, expressed optimism about the quarter’s outcomes, highlighting solid growth in both revenue and operating income despite a shifting market. Nonetheless, in North America, the company experienced a 1% decline in volume sales during the quarter. Quincey attributed this drop to “softness in away-from-home channels,” such as water, sports drinks, coffee, tea, and soda.
The decrease in sales was somewhat mitigated by the success of Fairlife milk and Coke, which ranked first and second in retail sales growth for the quarter. To counteract the decline, Quincey noted that Coca-Cola is collaborating with food chains to include its sodas in combo meal offerings, with specific efforts aimed at enhancing McDonald’s $5 meal deal that features a soft drink.
Despite the challenges, Coca-Cola exceeded Wall Street’s expectations. In the second quarter, the company reported $12.4 billion in revenue, translating to approximately $0.84 per share, surpassing analyst predictions of $11.76 billion or roughly $0.81 per share.
Looking ahead, Coca-Cola raised its organic revenue growth forecast to between 9% and 10%, an increase from its earlier estimate of 8% to 9%.
Similarly, Pepsi has faced challenges in engaging U.S. consumers, who are increasingly gravitating toward 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 in previous years. In early July, Pepsi cited a series of product recalls as a reason for its lackluster second-quarter performance.