Weight loss medications and non-alcoholic beverage choices are leading consumers in the U.S. to reduce their soda purchases. Despite this trend, Coca-Cola reported strong second-quarter earnings, fueled by robust global demand for its beverages, prompting the company to revise its full-year forecast upward.
Coca-Cola CEO James Quincey expressed optimism about the company’s second-quarter results, which showcased solid growth in both revenue and operating income amidst a shifting market environment.
However, the company experienced a 1% decline in volume sales within North America during the quarter. Quincey attributed this decrease for the U.S. division to weaker performance in away-from-home channels, including products such as water, sports drinks, coffee, tea, and sodas.
To counterbalance the decline, Coca-Cola highlighted the success of its Fairlife milk and its flagship soda, Coke, which ranked first and second in retail sales growth respectively during the quarter.
Quincey indicated that Coca-Cola is collaborating with restaurant chains to include soda in combo meals to drive sales. In particular, the company is working with McDonald’s to enhance its $5 meal deal, which features a soft drink.
Overall, Coca-Cola exceeded Wall Street’s projections, reporting $12.4 billion in revenue for the second quarter, which equates to approximately $0.84 per share. Analysts had anticipated revenue of $11.76 billion, approximately $0.81 per share, as per FactSet.
The company has raised its forecast for organic revenue growth to between 9% and 10%, up from an earlier estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in attracting U.S. consumers who are increasingly prioritizing weight loss and healthier lifestyles. A recent Gallup poll noted a significant decrease in alcohol consumption among young adults in the U.S. Earlier in July, Pepsi pointed to several recalls as a reason for its subdued second-quarter performance.