Weight loss medications and non-alcoholic alternatives are causing U.S. consumers to hold off on purchasing sodas. Despite this trend, Coca-Cola reported strong second-quarter earnings, fueled by high global demand for its beverages. This success has led the company to raise its full-year projections.
Coca-Cola CEO James Quincey expressed optimism about the company’s performance, noting solid revenue and operating income growth amid changing market conditions. However, the company experienced a 1% decline in volume sales in North America during the quarter. Quincey attributed this drop to decreased sales in “away-from-home channels,” encompassing water, sports drinks, tea, coffee, and soda.
Certain products helped counterbalance the decline, particularly Fairlife milk and Coke, which ranked first and second in retail sales growth respectively.
To combat the downward trend, Coca-Cola is collaborating with food chains to integrate its sodas into combo meals. Reports suggest the company is working closely with McDonald’s to enhance the value of its $5 meal deal, which includes a soft drink.
Overall, Coca-Cola exceeded Wall Street expectations, generating $12.4 billion in revenue for the second quarter, translating to approximately $0.84 per share. Analysts had projected earnings of around $11.76 billion, or about $0.81 per share.
The company has revised its forecast for organic revenue growth upward to between 9% and 10%, improving from its earlier estimate of 8% to 9%.
Pepsi, facing similar challenges, is struggling to attract the attention of U.S. consumers increasingly focused on health and weight loss. Young adults are reportedly consuming less alcohol than in previous years, according to a Gallup poll. In early July, Pepsi cited a series of product recalls as a reason for its underwhelming performance in the second quarter.