Weight loss medications and non-alcoholic alternatives are leading U.S. consumers to reconsider their soda purchases. Despite this trend, Coca-Cola announced strong second-quarter earnings, driven by robust global demand for its beverages, prompting the company to raise its full-year guidance.
Coca-Cola CEO James Quincey expressed optimism about the company’s performance, stating, “We are encouraged with our second-quarter results, which delivered solid topline and operating income growth in an ever-changing landscape.”
Nonetheless, in North America, Coca-Cola’s volume sales fell by 1% during the quarter. Quincey noted that this decline was influenced by “softness in away-from-home channels,” which encompass water, sports drinks, coffee, tea, and soda. The dip in sales was somewhat balanced by the success of Fairlife milk and its flagship product, Coke, which ranked first and second in retail sales growth for the quarter.
To combat the sales decline, Coca-Cola is collaborating with fast-food chains to incorporate its soda into combo meals. Reports indicate that the beverage company is partnering with McDonald’s to enhance its $5 meal deal that includes a soft drink.
Overall, Coca-Cola outperformed Wall Street expectations with reported revenues of $12.4 billion for the second quarter, equating to approximately $0.84 per share. Analysts had projected revenues of $11.76 billion, or around $0.81 per share.
The company has revised its forecast for organic revenue growth to between 9% and 10%, increasing from its earlier estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in attracting U.S. consumers, who are leaning toward products that emphasize weight loss and healthier lifestyles. Young adults in the U.S. are also drinking significantly less alcohol than in the past, according to a Gallup poll. In early July, Pepsi attributed its lackluster second quarter to a series of product recalls.