Weight loss medications and non-alcoholic beverage options have led U.S. consumers to reduce their soda purchases. Despite this trend, Coca-Cola reported strong second-quarter earnings on Tuesday, boosted by robust global demand for its beverages, prompting the company to increase its full-year guidance.
James Quincey, CEO of Coca-Cola, expressed optimism about the company’s second-quarter performance, highlighting solid growth in both revenue and operating income amidst a shifting market landscape.
In North America, however, Coca-Cola experienced a 1% decline in volume sales during the quarter. Quincey noted that this drop was primarily due to “softness in away-from-home channels,” which encompasses its water, sports drinks, coffee, tea, and soda products. The decline was partially balanced by strong sales of its Fairlife milk and its flagship soda, Coke, which ranked first and second in retail sales growth for the quarter.
To address the declining soda sales, Quincey mentioned that Coca-Cola is collaborating with food chains to incorporate its beverages into combo meals. The company is reportedly working with McDonald’s to enhance the fast food chain’s $5 meal deal that includes a soft drink.
Overall, Coca-Cola surpassed Wall Street expectations with second-quarter revenues totaling $12.4 billion, or approximately $0.84 per share, exceeding forecasts of $11.76 billion or around $0.81 per share.
The company has raised its forecast for organic revenue growth to between 9% and 10%, up from its earlier prediction of 8% to 9%.
Similarly, Pepsi is facing challenges in engaging U.S. consumers, who are gravitating towards products that promote weight loss and healthier lifestyles. A recent Gallup poll indicates that young adults in the U.S. are consuming significantly less alcohol than in previous years. In early July, Pepsi attributed its lackluster second-quarter performance to a series of product recalls.