Weight loss medications and non-alcoholic alternatives are causing U.S. consumers to hesitate before purchasing sodas. Nevertheless, Coca-Cola announced healthy earnings for the second quarter, spurred by strong global demand for its beverage offerings, and subsequently raised its full-year expectations.
James Quincey, Coca-Cola’s CEO, expressed optimism regarding the company’s second-quarter results, indicating successful growth in revenue and operating income despite a shifting market landscape.
In North America, however, the company experienced a 1% decline in volume sales this quarter. Quincey attributed the slowdown in the U.S. division to reduced sales in “away-from-home channels,” which encompass water, sports drinks, coffee, tea, and soda products.
The decrease was partially mitigated by the success of its Fairlife milk brand and the strong performance of its flagship drink, Coca-Cola, which ranked first and second in retail sales growth for the quarter.
To counteract the volume drop, Coca-Cola is collaborating with food chains to incorporate its sodas into combo meal deals. Reports suggest that the company is partnering with McDonald’s to enhance the fast-food chain’s $5 meal offering, which includes a soft drink.
Overall, Coca-Cola surpassed Wall Street’s expectations, reporting $12.4 billion in revenue for the second quarter, equating to approximately $0.84 per share. Analysts had anticipated the company would yield revenues of about $11.76 billion, or around $0.81 per share.
Coca-Cola now predicts organic revenue growth in the range of 9% to 10%, up from its earlier estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in engaging U.S. consumers, who are increasingly opting for products that support weight loss and healthier lifestyles. A Gallup poll indicates a significant decrease in alcohol consumption among young adults in the U.S. Recently, Pepsi cited a series of product recalls as a factor contributing to its disappointing performance in the second quarter.