In the United States, consumers are increasingly delaying soda purchases due to the popularity of weight loss medications and non-alcoholic beverage options.
Despite this trend, Coca-Cola reported strong earnings for the second quarter on Tuesday, driven by a solid global demand for its soft drinks. The company has also adjusted its full-year guidance upward as a result.
James Quincey, the CEO of Coca-Cola, expressed optimism about the company’s second-quarter results, highlighting substantial growth in both revenue and operating income in a dynamic market environment.
However, Coca-Cola did experience a 1% dip in volume sales in North America during the same quarter. Quincey noted that this decline was influenced by “softness in away-from-home channels,” which includes various beverage categories such as water, sports drinks, coffee, tea, and sodas.
The decrease was somewhat balanced by strong sales in Coca-Cola’s Fairlife milk line and solid performance from their flagship soda brand, which ranked first and second in retail sales growth, respectively.
To mitigate the sales decline, Coca-Cola is partnering with food chains to incorporate its sodas into combo meal offerings. The beverage giant is reportedly collaborating with McDonald’s to enhance the fast-food chain’s $5 meal deal, which comes with a soft drink.
Coca-Cola ultimately surpassed Wall Street projections, reporting quarterly revenue of $12.4 billion, equating to about 84 cents per share. Analysts had anticipated revenue of $11.76 billion, or roughly 81 cents per share, according to data from FactSet.
Looking ahead, Coca-Cola has revised its forecast for organic revenue growth to between 9% and 10%, increasing its earlier estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in attracting U.S. consumers, who are shifting towards products that emphasize weight loss and healthier choices. A Gallup poll indicates that young adults in the U.S. are consuming significantly less alcohol than before. Earlier in July, Pepsi attributed its subdued second-quarter performance to a series of product recalls.