Consumers in the U.S. are increasingly delaying soda purchases due to the rising popularity of weight loss medications and non-alcoholic beverage options.
Despite this trend, Coca-Cola reported strong earnings for the second quarter, driven by robust global demand for its beverages, leading the company to raise its full-year guidance.
Coca-Cola CEO James Quincey expressed optimism regarding the company’s second-quarter performance, highlighting significant growth in revenue and operating income amid changing market dynamics.
However, in North America, Coca-Cola did experience a 1% decline in volume sales during this quarter. Quincey attributed this drop to a decrease in sales from away-from-home channels, which include water, sports drinks, coffee and tea, and soda products.
The decline was somewhat mitigated by strong demand for Fairlife milk and Coca-Cola’s flagship soda brand, which ranked first and second in retail sales growth, respectively.
To counteract declining sales, Coca-Cola is collaborating with food chains to integrate its sodas into combo meals. The company has reportedly been working with McDonald’s to enhance its $5 meal deal, which includes a soft drink.
Overall, Coca-Cola exceeded Wall Street’s expectations, reporting $12.4 billion in revenue for the quarter, equating to approximately $0.84 per share. Analysts had predicted revenues of $11.76 billion, or about $0.81 per share.
The company has now increased its forecast for organic revenue growth to between 9% and 10%, revising its earlier estimate of 8% to 9%.
Similarly, Pepsi has faced challenges in the U.S. market as consumers shift towards options that emphasize weight loss and healthier lifestyles. A Gallup poll indicates that young adults in the U.S. are consuming significantly less alcohol than in the past. Earlier in July, Pepsi attributed its lackluster second-quarter results to a series of product recalls.