Consumers in the U.S. are hesitating to purchase sodas, influenced by the growing popularity of weight loss medications and non-alcoholic alternatives. Despite this trend, Coca-Cola reported strong second-quarter earnings, buoyed by global demand for its beverage offerings, leading the company to adjust its full-year forecasts upwards.
Coca-Cola’s CEO, James Quincey, expressed optimism about the company’s second-quarter performance, noting solid revenue and operating income growth amidst a fluctuating market. However, the company did experience a 1% decline in volume sales in North America during the quarter. Quincey attributed this decrease to “softness in away-from-home channels,” which encompass its range of water, sports drinks, coffee, tea, and soda products.
The slide in sales was partially balanced out by gains from Fairlife milk and Coke, which ranked first and second in retail sales growth, respectively. To counteract the decline, Coca-Cola is collaborating with food chains to integrate its sodas into combo meals. Reports indicate a partnership with McDonald’s to enhance the fast-food chain’s $5 meal deal, which includes a soft drink.
Coca-Cola exceeded Wall Street expectations, generating $12.4 billion in revenue for the second quarter, translating to about $0.84 per share. Analysts had predicted revenue of $11.76 billion, or approximately $0.81 per share, according to FactSet.
The company now anticipates organic revenue growth between 9% and 10%, an increase from its prior estimate of 8% to 9%.
Similarly, Pepsi has faced challenges in appealing to U.S. consumers, who are increasingly shifting towards products focused on weight loss and healthier lifestyles. Recent data from Gallup indicates a decline in alcohol consumption among young adults in the U.S. Earlier in July, Pepsi attributed its lackluster second quarter to a series of product recalls.