In the United States, consumers are increasingly delaying soda purchases, influenced by weight loss medications and non-alcoholic beverage options. Despite this trend, Coca-Cola reported strong second-quarter earnings on Tuesday, buoyed by sustained global demand for its products, leading the company to enhance its full-year outlook.
Coca-Cola’s CEO, James Quincey, expressed optimism about the second-quarter results, noting solid growth in both revenue and operating income amidst a shifting market landscape. However, the company did experience a 1% decline in volume sales in North America during the quarter. Quincey attributed this drop to reduced activity in away-from-home channels like water, sports drinks, coffee, tea, and soda.
The decrease was somewhat mitigated by increased sales of Fairlife milk and Coca-Cola soda, which ranked first and second in retail sales growth, respectively. To combat the declining volume, Coca-Cola is collaborating with fast food chains to incorporate its sodas into combo meal deals. Reports suggest that Coca-Cola is partnering with McDonald’s to enhance the value of its $5 meal deal, which includes a soft drink.
Overall, Coca-Cola exceeded Wall Street expectations, reporting $12.4 billion in revenue for the second quarter, translating to approximately $0.84 per share. Analysts had predicted revenues of around $11.76 billion, or about $0.81 per share. The company has revised its forecast for organic revenue growth to between 9% and 10%, an increase from its earlier estimate of 8% to 9%.
Pepsi, like Coca-Cola, is facing challenges in attracting U.S. consumers, who are increasingly favoring products that align with weight loss and healthier lifestyles. According to a Gallup poll, young adults in the U.S. are consuming significantly less alcohol than before. In early July, Pepsi cited a series of product recalls as factors contributing to its lackluster second-quarter performance.