Consumers in the U.S. are increasingly holding back on purchasing sodas, driven by the rise of weight loss medications and non-alcoholic alternatives. Despite this trend, Coca-Cola reported strong second-quarter earnings on Tuesday, buoyed by robust global demand for its beverage products, which has led the company to revise its full-year revenue forecast upwards.
James Quincey, Coca-Cola’s CEO, expressed optimism about the company’s performance, noting solid growth in both revenue and operating income despite the changing market conditions. However, in North America, Coke’s volume sales fell by 1% during the quarter. Quincey indicated that the decline in the U.S. segment was attributed to a decrease in sales across away-from-home channels, encompassing categories such as water, sports drinks, coffee, tea, and soda.
The company’s decrease in volume was somewhat mitigated by the success of its Fairlife milk brand and its flagship product, Coca-Cola, which ranked first and second in retail sales growth, respectively, for the period. To counteract the downturn, Coca-Cola is actively collaborating with food chains to incorporate its soft drinks into combo meals. Notably, the company is working with McDonald’s to enhance the attractiveness of the fast food giant’s $5 meal deal, which includes a beverage.
Coca-Cola’s overall performance exceeded analysts’ expectations. For the second quarter, the company reported revenue of $12.4 billion, translating to approximately $0.84 per share. This surpassed Wall Street’s projections of $11.76 billion in revenue, or about $0.81 per share, according to FactSet.
The company has also raised its forecast for organic revenue growth to a range of 9% to 10%, up from its previous estimate of 8% to 9%.
Pepsi, facing similar challenges in capturing consumer interest, has noted that U.S. customers are increasingly opting for products focused on weight loss and healthier lifestyles. A Gallup poll indicates that young adults in the U.S. are consuming significantly less alcohol than before. In early July, Pepsi attributed its disappointing second-quarter results to a series of recalls.