Consumers in the U.S. are increasingly delaying their soda purchases due to the rise of weight loss medications and non-alcoholic beverage options.
Despite this trend, Coca-Cola reported strong earnings for the second quarter on Tuesday, bolstered by high global demand for its beverage range. This performance led the company to revise its full-year financial guidance upwards.
James Quincey, CEO of Coca-Cola, expressed optimism about the company’s second-quarter results, noting the solid growth in revenue and operating income amid a shifting market environment.
However, Coca-Cola experienced a 1% decline in volume sales in North America during the quarter. Quincey explained on the earnings call that the decrease was largely due to “softness in away-from-home channels,” which encompasses products such as water, sports drinks, coffee, tea, and sodas.
This decline was somewhat mitigated by the success of Fairlife milk and the popularity of Coke, which ranked first and second in retail sales growth respectively during this period.
To counter the volume decline, Quincey mentioned efforts to partner with fast food chains to include Coca-Cola beverages in combo meals. Notably, Coca-Cola is collaborating with McDonald’s to enhance the fast food giant’s $5 meal deal, which features a soft drink.
Overall, Coca-Cola surpassed market expectations, reporting revenues of $12.4 billion for the second quarter, translating to approximately $0.84 per share. Analysts had anticipated revenue of $11.76 billion, or around $0.81 per share.
The company has now boosted its forecast for organic revenue growth to between 9% and 10%, an increase from the earlier projection of 8% to 9%.
Similarly, Pepsi has faced challenges in attracting American consumers, who are leaning towards products that promote weight loss and healthier lifestyles. A recent Gallup poll indicates a notable decline in alcohol consumption among young adults. In early July, Pepsi attributed its lackluster second quarter to a series of product recalls.