Consumers in the United States are increasingly opting for weight loss medications and non-alcoholic drinks, impacting soda purchases.
Despite this trend, Coca-Cola reported strong earnings for the second quarter, driven by a significant global demand for its beverage products. This success prompted the company to raise its full-year financial outlook.
“We are pleased with our second-quarter results, which showed solid growth in revenue and operating income amid a dynamic market,” stated James Quincey, CEO of Coca-Cola.
However, volume sales in North America fell by 1% during the quarter, as Quincey acknowledged that the U.S. division faced challenges due to reduced activity in away-from-home channels, which encompass water, sports drinks, coffee, tea, and sodas.
This decline was somewhat mitigated by the success of Fairlife milk and Coca-Cola itself, which ranked first and second in retail sales growth, respectively, for the quarter.
To counter the sales dip, Coca-Cola is collaborating with fast-food chains to integrate its products into meal deals. The company is reportedly partnering with McDonald’s to enhance its $5 meal deal, which includes a soft drink.
Overall, Coca-Cola surpassed Wall Street expectations, reporting $12.4 billion in revenue and earnings of about $0.84 per share. The anticipated revenue had been $11.76 billion, or approximately $0.81 per share, according to FactSet.
Coca-Cola has now revised its forecast, predicting organic revenue growth between 9% and 10%, an increase from the previous estimate of 8% to 9%.
Pepsi, like Coca-Cola, is also facing challenges in gaining traction with U.S. consumers, who are leaning towards products that promote weight loss and healthier lifestyles. A Gallup poll indicates a noteworthy decline in alcohol consumption among young adults in the U.S. Earlier in July, Pepsi attributed its weaker second-quarter performance to a series of product recalls.