In the U.S., consumer interest in weight loss drugs and non-alcoholic options is impacting soda sales. Despite this trend, Coca-Cola reported strong earnings for the second quarter on Tuesday, fueled by healthy global demand for its beverage products, prompting the company to raise its full-year outlook.
Coca-Cola CEO James Quincey expressed optimism about the company’s performance, noting solid revenue and operating income growth amidst a shifting market. However, the company experienced a 1% decline in volume sales in North America during the quarter. Quincey attributed the softening in the U.S. market to decreased consumption in away-from-home channels, which encompass various beverage products, including water, sports drinks, coffee, tea, and soda.
The decline was partially mitigated by the success of its Fairlife milk brand and strong sales of Coke, which ranked first and second in retail sales growth for the quarter. To counteract the dip in volume, Coca-Cola is partnering with food chains, including McDonald’s, to integrate its sodas into combo meals, such as the popular $5 meal deal featuring a soft drink.
Coca-Cola exceeded Wall Street’s predictions, reporting revenues of $12.4 billion for the second quarter, approximately $0.84 per share, surpassing the anticipated $11.76 billion or $0.81 per share according to FactSet. The company now forecasts organic revenue growth between 9% and 10%, an increase from its earlier estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in attracting U.S. consumers, who are increasingly focused on healthier choices and weight loss efforts. A recent Gallup poll indicates that young adults in the U.S. are significantly reducing their alcohol consumption. In early July, Pepsi cited a series of product recalls as a reason for its weaker performance in the second quarter.