Consumers in the U.S. are holding off on buying sodas, influenced by the popularity of weight loss drugs and the rise of non-alcoholic beverage options. Despite this trend, Coca-Cola reported strong earnings for the second quarter, driven by solid global demand for its products, leading the company to raise its full-year forecast.
Coca-Cola CEO James Quincey expressed optimism about the company’s second-quarter performance, highlighting significant growth in both revenue and operating income amidst a changing market landscape. However, the company’s North American volume sales saw a slight decline of 1% during the quarter, attributed to weak performance in what Quincey referred to as “away-from-home channels,” which include various beverage categories.
The sales drop was partially mitigated by the success of Fairlife milk and the performance of Coke, which led retail sales growth in its category. To combat declining soda sales, Coca-Cola is collaborating with food chains, including McDonald’s, to integrate its beverages into meal deals.
Ultimately, Coca-Cola exceeded Wall Street estimates with second-quarter revenue hitting $12.4 billion, translating to approximately $0.84 per share. Analysts had expected $11.76 billion in revenue, around $0.81 per share.
Looking ahead, the company has lifted its organic revenue growth forecast to between 9% and 10%, an increase from the previous estimate of 8% to 9%.
Similar to Coca-Cola, PepsiCo is also facing challenges as U.S. consumers increasingly prioritize weight loss and healthier habits. According to a Gallup poll, young adults in the U.S. are consuming significantly less alcohol than in the past. In July, PepsiCo reported subdued performance for its second quarter, partially due to several product recalls.