Weight loss medications and non-alcoholic alternatives are leading consumers in the U.S. to reduce their soda purchases.
Despite this trend, Coca-Cola reported strong second-quarter earnings, attributing its success to robust global demand for its beverages, which has prompted the company to increase its full-year forecasts. CEO James Quincey expressed optimism about the results, noting solid growth in both revenue and operating income amid changing market conditions.
However, Coca-Cola experienced a 1% decline in volume sales in North America during the quarter. Quincey explained that this drop was mainly due to lackluster performance in away-from-home channels, which encompass products like water, sports drinks, coffee, tea, and sodas.
The decline was mitigated in part by the company’s Fairlife milk line and its classic Coke, which ranked first and second in retail sales growth for the quarter. To counteract the sales drop, Coca-Cola is collaborating with food chains to integrate its sodas into combo meals, with efforts focused on enhancing the $5 meal deal at McDonald’s, which includes a soft drink.
Coca-Cola surpassed Wall Street’s expectations, reporting $12.4 billion in revenue for the second quarter, translating to approximately $0.84 per share. Analysts had predicted revenue of $11.76 billion, or approximately $0.81 per share, according to FactSet.
Looking ahead, Coca-Cola now anticipates organic revenue growth between 9% and 10%, an increase from its prior estimate of 8% to 9%.
Similar to Coca-Cola, Pepsi has faced challenges in garnering consumer interest in the U.S., as people increasingly gravitate toward weight loss-focused and healthier options. A Gallup poll indicated that younger adults are consuming significantly less alcohol than in the past. In early July, Pepsi attributed its lackluster second-quarter performance to several product recalls.