Weight loss medications and non-alcoholic alternatives are leading U.S. consumers to reduce their soda purchases. Despite this trend, Coca-Cola reported strong second-quarter earnings, largely due to high global demand for its beverages, prompting the company to increase its full-year projections.
Coca-Cola’s CEO James Quincey expressed optimism about the second-quarter results, noting solid revenue and operating income growth amidst changing market conditions. However, the company’s volume sales in North America fell by 1% during the quarter. Quincey attributed this decline to decreased sales in away-from-home settings, affecting categories such as water, sports drinks, coffee, tea, and soda.
The decline in soda volume was partially countered by growth in Coca-Cola’s Fairlife milk line and the Coke brand itself, which ranked first and second in retail sales growth. To mitigate the volume drop, Quincey mentioned that Coca-Cola is collaborating with fast-food chains to include its beverages in combo meal offerings. Specifically, they are working with McDonald’s to enhance the appeal of the fast food chain’s $5 meal deal, which includes a soft drink.
Coca-Cola’s performance exceeded Wall Street estimates, with the company reporting $12.4 billion in revenue for the second quarter, translating to about $0.84 per share. Analysts had anticipated revenue of $11.76 billion, or approximately $0.81 per share. The company has adjusted its forecast for organic revenue growth to between 9% and 10%, raising it from the previous estimate of 8% to 9%.
Pepsi has faced similar challenges as it strives to gain traction with U.S. consumers, who are increasingly opting for products focused on weight loss and healthier lifestyles. A recent Gallup poll indicates that young adults in the U.S. are consuming less alcohol than in previous years. In July, Pepsi attributed its lackluster second quarter results to a series of product recalls.