In the United States, consumers are currently hesitant about purchasing sodas, influenced by the rise of weight loss medications and non-alcoholic alternatives. Despite this trend, Coca-Cola reported strong second-quarter earnings on Tuesday, benefiting from significant global demand for its beverages, which prompted the company to increase its full-year expectations.
Coca-Cola CEO James Quincey expressed optimism about the company’s performance, noting the solid growth in revenue and operating income amidst a changing market. However, the company experienced a 1% decline in volume sales in North America during the quarter. Quincey attributed this drop to weakened sales in away-from-home channels, which encompass products like water, sports drinks, coffee, tea, and sodas.
The decline was somewhat countered by the success of Fairlife milk and strong sales of Coke, which ranked first and second in retail sales growth during the period. To combat the downturn, Coca-Cola is collaborating with restaurant chains to include its sodas in combo meals, specifically working with McDonald’s to enhance its $5 meal deal that features a soft drink.
Financially, Coca-Cola exceeded Wall Street expectations in the second quarter, reporting $12.4 billion in revenue, translating to about $0.84 per share. Analysts had predicted revenues around $11.76 billion, or roughly $0.81 per share. Looking ahead, the company now anticipates organic revenue growth between 9% and 10%, an increase from its earlier forecast of 8% to 9%.
Similarly, Pepsi is also facing challenges in engaging U.S. consumers, who are increasingly focused on weight loss and healthier lifestyle choices. A Gallup poll highlights that young adults in the U.S. are consuming significantly less alcohol than before. Earlier this month, Pepsi attributed its underwhelming second-quarter performance to multiple product recalls.