Consumers in the U.S. are hesitating to purchase soda due to the rise of weight loss medications and non-alcoholic alternatives. Despite this trend, Coca-Cola reported strong second-quarter earnings, fueled by solid global demand for its products, which led the company to raise its full-year outlook.
Coca-Cola CEO James Quincey expressed optimism regarding the company’s performance, stating that they observed significant top-line and operating income growth amidst a shifting market. However, volume sales in North America fell by 1% during the quarter. Quincey attributed this decline to decreased sales in “away-from-home channels,” which encompass water, sports drinks, coffee, tea, and soda.
The decline in soda sales was somewhat mitigated by Coca-Cola’s Fairlife milk and its flagship product, Coke, which ranked first and second in retail sales growth, respectively, during the quarter. To combat the drop in sales, Coca-Cola is partnering with food chains to incorporate its soda in combo meals, with a focus on enhancing McDonald’s $5 meal deal, which includes a soft drink.
Coca-Cola surpassed Wall Street’s expectations in the second quarter, generating $12.4 billion in revenue, equating to about $0.84 per share, compared to analysts’ forecasts of $11.76 billion and approximately $0.81 per share. The company is now projecting organic revenue growth between 9% and 10%, an increase from its earlier estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in capturing the attention of U.S. consumers who are gravitating towards products that emphasize weight loss and healthier lifestyles. According to a recent Gallup poll, younger adults in the U.S. are consuming significantly less alcohol than before. In early July, Pepsi attributed its lackluster second-quarter performance to multiple product recalls.