Weight loss medications and a trend towards non-alcoholic beverages are causing consumers in the U.S. to delay their soda purchases. Despite this, Coca-Cola reported strong second-quarter earnings, bolstered by solid global demand for its beverages, which led the company to raise its full-year outlook.
Coca-Cola’s 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’s volume sales in North America fell by 1% during the quarter. Quincey explained that this decline in the U.S. was influenced by less demand in away-from-home channels, which encompass their range of products including water, sports drinks, coffee, tea, and sodas.
The company noted that the decline in sales was somewhat mitigated by its Fairlife milk brand and strong retail sales of Coca-Cola, which ranked first and second in growth for the quarter.
To address the volume drop, Coca-Cola is collaborating with fast-food chains to integrate its sodas into combo meal deals. Reports indicated that Coca-Cola is working closely with McDonald’s to enhance its $5 meal deal, which includes a soft drink.
Overall, Coca-Cola exceeded analysts’ expectations by reporting $12.4 billion in revenue for the second quarter, translating to about $0.84 per share. Analysts had projected the company to generate $11.76 billion, roughly $0.81 per share.
The company has since adjusted its forecast for organic revenue growth to between 9% and 10%, up from the previous estimate of 8% to 9%.
In a similar vein, Pepsi is facing challenges in capturing the interest of U.S. consumers, who are leaning towards weight-loss focused and healthier options. Additionally, younger adults in the U.S. are significantly reducing their alcohol consumption, according to a Gallup poll. Earlier in July, Pepsi attributed a lackluster second quarter to various product recalls.