Weight loss medications and non-alcoholic alternatives are leading U.S. consumers to reduce their soda purchases. Despite this trend, Coca-Cola reported strong earnings for the second quarter, largely due to heightened global demand for its products, prompting the company to adjust its full-year outlook upwards.
Coca-Cola CEO James Quincey expressed optimism about the company’s second-quarter performance, noting significant growth in both revenue and operating income amid a changing market landscape.
However, in North America, Coca-Cola experienced a 1% decline in volume sales during the quarter. Quincey attributed this drop to a decrease in “away-from-home channels,” which encompass water, sports drinks, coffee, tea, and sodas. The decline was partly mitigated by sales from its Fairlife milk brand and its Coca-Cola soda, which ranked first and second in retail sales growth, respectively, during the quarter.
To address the volume decrease, Quincey indicated that Coca-Cola is collaborating with fast-food chains to bundle its sodas with combo meals. Reports suggest that the company is working with McDonald’s to enhance the fast-food chain’s $5 meal deal, which includes a soft drink.
Despite the challenges, Coca-Cola exceeded market expectations with second-quarter revenues of $12.4 billion, translating to earnings of approximately $0.84 per share. Analysts had anticipated revenues of around $11.76 billion, or about $0.81 per share, according to FactSet.
The company has revised its organic revenue growth forecast to between 9% and 10%, improving from an earlier estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in attracting U.S. consumers, who are increasingly focused on weight loss and healthier lifestyle choices. A recent Gallup poll also indicates that young adults in the U.S. are consuming significantly less alcohol than in the past. In July, Pepsi attributed its lackluster second-quarter performance to a series of product recalls.