In the United States, the rise of weight loss medications and a trend towards non-alcoholic beverages have prompted consumers to cut back on soda purchases.
Despite this shift, Coca-Cola reported solid earnings for the second quarter, fueled by strong global demand for its beverages, and subsequently raised its full-year revenue guidance. CEO James Quincey expressed optimism regarding the company’s performance, noting substantial growth in both revenue and operating income amidst a fluctuating market.
However, the North American sector experienced a 1% decline in volume sales during the quarter. Quincey pointed to decreased sales in away-from-home channels, which encompasses water, sports drinks, coffee, tea, and soda products, as a key factor in this drop. The decline was somewhat mitigated by the success of Fairlife milk and Coca-Cola itself, with both products claiming top spots in retail sales growth.
To counteract the volume dip, Coca-Cola is collaborating with food chains to integrate its sodas into combo meal offerings. Reports indicate that partnerships, particularly with McDonald’s, aim to enhance value meal options that include soft drinks.
Overall, Coca-Cola surpassed Wall Street expectations, reporting $12.4 billion in revenue for the second quarter, leading to earnings of about $0.84 per share. Analysts had projected revenues of around $11.76 billion and earnings of roughly $0.81 per share.
The company now forecasts organic revenue growth of 9% to 10%, an increase from the previous estimate of 8% to 9%.
Similarly, Pepsi is also facing challenges in attracting American consumers, who are leaning towards products that support weight loss and healthier lifestyles. A Gallup poll indicates that young adults in the U.S. are drinking significantly less alcohol than in the past. In early July, Pepsi cited a series of product recalls as a contributing factor to its lackluster second-quarter results.