Weight loss medications and non-alcoholic alternatives are causing U.S. consumers to hesitate in purchasing sodas.
Despite these challenges, Coca-Cola reported solid second-quarter earnings, bolstered by strong global demand for its beverage products. This success has prompted the company to increase its full-year guidance.
Coca-Cola CEO James Quincey expressed optimism about the company’s performance, stating, “We are encouraged with our second-quarter results, which delivered solid topline and operating income growth in an ever-changing landscape.”
Nevertheless, Coca-Cola saw a 1% decline in volume sales in North America during the quarter. Quincey attributed this drop in the U.S. market primarily to reduced sales in away-from-home channels, which encompass water, sports drinks, coffee, tea, and soda products.
The company noted that this decline was somewhat mitigated by the popularity of Fairlife milk and its signature soft drink, Coke, which ranked first and second in retail sales growth, respectively.
To address the sales decline, Quincey mentioned that Coca-Cola is collaborating with food chains to include its sodas in combo meals. Notably, the company is working with McDonald’s to enhance its $5 meal deal that includes a soft drink.
Overall, Coca-Cola exceeded Wall Street expectations, reporting $12.4 billion in revenue for the quarter, equating to approximately $0.84 per share. Analysts had projected revenue of $11.76 billion, or roughly $0.81 per share, according to FactSet.
Coca-Cola has also revised its forecast for organic revenue growth, now expecting an increase of between 9% and 10%, up from an earlier estimate of 8% to 9%.
Similar to Coca-Cola, Pepsi is facing difficulties in attracting U.S. consumers who are increasingly favoring products aimed at weight loss and healthier lifestyles. Additionally, a Gallup poll indicates that young adults in the U.S. are consuming significantly less alcohol than in previous years. In early July, Pepsi attributed its lackluster second-quarter results to a series of product recalls.