In the United States, weight loss medications and non-alcoholic alternatives are prompting consumers to reduce their soda purchases. Despite this trend, Coca-Cola announced strong earnings for the second quarter, fueled by a robust global demand for its beverages, leading the company to increase its full-year forecast.
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.”
However, the company reported a 1% decline in volume sales in North America during the quarter. Quincey attributed this decline in the U.S. market to reduced consumption in away-from-home channels, which encompass its water, sports drinks, coffee, tea, and soda products. The drop in sales was somewhat mitigated by strong performance from Fairlife milk and its flagship Coke product, which achieved notable growth in retail sales.
To address the sales decline, Quincey mentioned that Coca-Cola is collaborating with restaurant chains to include its sodas in combo meals. The company is reportedly working with McDonald’s to enhance the appeal of the fast food chain’s $5 meal deals, which include a soft drink.
Overall, Coca-Cola exceeded Wall Street estimates, reporting revenues of $12.4 billion for the second quarter, translating to earnings of approximately $0.84 per share. Analysts had projected revenues of $11.76 billion with earnings around $0.81 per share, according to FactSet.
The company has revised its forecast for organic revenue growth, now expecting an increase between 9% and 10%, up from its earlier projection of 8% to 9%.
Similarly, Pepsi is facing challenges in capturing the interest of U.S. consumers, who are increasingly drawn to products that promote weight loss and healthier lifestyles. A Gallup poll earlier revealed that young adults in the U.S. are consuming significantly less alcohol than in previous years. In early July, Pepsi pointed to several product recalls as a factor in its lackluster second-quarter results.