Weight loss medications and non-alcoholic options are causing American consumers to hesitate in purchasing sodas.
Despite this trend, Coca-Cola reported strong second-quarter earnings on Tuesday, attributing part of its success to high global demand for its beverages, which led the company to revise its full-year projections upwards.
James Quincey, CEO of Coca-Cola, expressed optimism about the company’s second-quarter results, highlighting solid revenue and income growth amid a shifting market landscape.
However, in North America, Coca-Cola saw a 1% decline in volume sales for the quarter. Quincey explained during the earnings call that this decline was due to “softness in away-from-home channels,” affecting various product categories, including bottled water, sports drinks, coffee, tea, and soda.
To counter this decline, the company noted that its Fairlife milk brand and its flagship Coca-Cola soda had performed well, ranking first and second in retail sales growth, respectively.
Quincey mentioned that Coca-Cola is collaborating with fast food chains to incorporate its sodas into combo meal offerings. The company is reportedly partnering with McDonald’s to enhance the appeal of its $5 meal deal that includes a soft drink.
Overall, Coca-Cola exceeded Wall Street expectations, reporting $12.4 billion in revenue for the second quarter, translating to about $0.84 per share. This surpassed analysts’ projections of $11.76 billion in revenue, or roughly $0.81 per share.
Moving forward, Coca-Cola has revised its forecast for organic revenue growth to between 9% and 10%, up from the previous estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in attracting U.S. consumers, who are leaning towards products that emphasize weight loss and healthier choices. A recent Gallup poll indicated that young adults in the U.S. are consuming significantly less alcohol. In early July, Pepsi attributed its lackluster second-quarter results to a series of product recalls.