U.S. consumers are increasingly hesitant to purchase sodas, influenced by the rise of weight loss drugs and non-alcoholic beverages.
Despite this trend, Coca-Cola reported strong earnings for the second quarter, supported by solid global demand for its products, leading the company to raise its full-year projections. CEO James Quincey expressed optimism about the results, highlighting significant revenue and operating income growth in a rapidly evolving market.
However, Coca-Cola did see a 1% decline in volume sales in North America, a trend attributed to “softness in away-from-home channels,” which encompasses water, sports drinks, coffee, tea, and sodas. Quincey noted that the lower sales were partially mitigated by successful performances of Fairlife milk and Coca-Cola itself, which ranked first and second in retail sales growth, respectively.
To counter the sales decline, Coca-Cola is collaborating with food chains to include its sodas in combo meals. Reports indicate the company is partnering with McDonald’s to enhance the fast-food chain’s $5 meal deal, which features a soft drink.
Overall, Coca-Cola surpassed Wall Street expectations with second-quarter revenues of $12.4 billion, translating to approximately $0.84 per share. Analysts had anticipated revenues of $11.76 billion, or around $0.81 per share, according to FactSet.
The company is now projecting organic revenue growth in the range of 9% to 10%, an increase from its earlier forecast of 8% to 9%.
In a similar vein, Pepsi has also faced challenges in attracting U.S. consumers, who are shifting towards products that emphasize weight loss and healthier lifestyles. A recent Gallup poll indicated that young adults in the U.S. are consuming significantly less alcohol than before. In early July, Pepsi cited various product recalls as reasons for its weaker second-quarter performance.