In the United States, consumers are showing a tendency to hold off on soda purchases due to the increasing popularity of weight loss medications and non-alcoholic alternatives. A recent study indicated that the pill form of Novo Nordisk’s Ozempic can significantly reduce the risk of heart attacks and strokes.
Despite these trends, Coca-Cola announced strong second-quarter earnings, bolstered by robust global demand for its beverage products, which led the company to raise its full-year guidance. CEO James Quincey expressed optimism about the results, highlighting notable growth in both topline and operating income in a rapidly changing market.
However, Coca-Cola experienced a 1% decline in volume sales in North America during the quarter. Quincey attributed this dip to reduced performance in away-from-home channels, which encompass beverages sold in venues such as restaurants and vending machines. This decline was somewhat mitigated by the success of Fairlife milk and notable retail sales growth for Coca-Cola’s flagship soda.
To counteract the downturn, Quincey mentioned that the company is collaborating with food chains to integrate its soda products into combo meal deals, particularly with McDonald’s as it enhances its $5 meal deal that includes a soft drink.
Overall, Coca-Cola surpassed Wall Street expectations, reporting $12.4 billion in revenue for the second quarter, equating to approximately $0.84 per share. Analysts had anticipated revenues of around $11.76 billion, or $0.81 per share.
Looking ahead, the company has adjusted its forecast for organic revenue growth to between 9% and 10%, raising it from the previous estimate of 8% to 9%.
Pepsi, similarly, has been facing challenges in attracting U.S. consumers who are gravitating towards products that prioritize weight loss and health. A Gallup poll has noted a significant decrease in alcohol consumption among young adults in the U.S. Recently, Pepsi attributed its lackluster second quarter to a series of product recalls.