In the United States, consumers are increasingly hesitant to purchase sodas, influenced by the rise of weight loss drugs and non-alcoholic alternatives.
Despite this trend, Coca-Cola announced robust second-quarter earnings, fueled by strong global demand for its beverage offerings, leading the company to raise its full-year forecast. CEO James Quincey expressed optimism regarding the results, highlighting solid topline and operating income growth amid a shifting market landscape.
However, the company’s North American volume sales saw a 1% decline during the quarter. Quincey noted that this decrease was largely due to weaker performance in away-from-home channels, which encompass water, sports drinks, coffee and tea, as well as soda products. This decline was somewhat mitigated by the success of Coca-Cola’s Fairlife milk and its flagship soda, Coke, which ranked first and second in retail sales growth for the quarter.
To counteract the volume drop, Coca-Cola is collaborating with food chains to include its sodas in combo meals. Reports suggest that the company is working with McDonald’s to enhance the appeal of its $5 meal deal, which includes a soft drink.
Overall, Coca-Cola exceeded Wall Street’s expectations during the second quarter, reporting $12.4 billion in revenue, equivalent to approximately $0.84 per share, surpassing the anticipated $11.76 billion and around $0.81 per share, based on FactSet data. The company has now adjusted its projections for organic revenue growth to between 9% and 10%, an increase from the earlier estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in attracting U.S. consumers, who are increasingly opting for products focused on weight loss and healthier lifestyles. A recent Gallup poll indicated that young adults in the U.S. are consuming significantly less alcohol than before. Pepsi cited a series of product recalls as a contributing factor to its lackluster performance in the second quarter.