In the United States, consumers are increasingly holding off on purchasing sodas, influenced by the rise of weight loss medications and non-alcoholic beverage options.
Despite this trend, Coca-Cola reported strong earnings for the second quarter, fueled by solid global demand for its beverages. The company announced an increase in its full-year guidance, indicating its continued growth trajectory. CEO James Quincey expressed optimism about the results, noting significant revenue and operating income growth in a shifting marketplace.
However, in North America, Coca-Cola experienced a 1% decline in volume sales during the quarter. Quincey attributed this drop to “softness in away-from-home channels,” which encompass various drink categories, including water, sports drinks, coffee, tea, and sodas. This decline was somewhat mitigated by the success of Fairlife milk and Coca-Cola’s flagship soda, which ranked first and second in retail sales growth, respectively.
To address the sales decline, Coca-Cola is collaborating with food chains to incorporate soda into combo meals. The partnership with McDonald’s aims to enhance the fast-food chain’s $5 meal deal, which includes a soft drink.
Coca-Cola surpassed Wall Street’s expectations in the second quarter, reporting revenue of $12.4 billion or $0.84 per share, exceeding the projected revenue of $11.76 billion or $0.81 per share. The company has raised its forecast for organic revenue growth to between 9% and 10%, up from previous estimates of 8% to 9%.
Similar to Coca-Cola, Pepsi is facing challenges in appealing to U.S. consumers, who are increasingly focusing on health and weight loss. A recent Gallup poll indicated that young adults in the U.S. are drinking significantly less alcohol. In early July, Pepsi attributed its lackluster second-quarter performance to a series of product recalls.