In the U.S., the popularity of weight loss medications and non-alcoholic alternatives is leading consumers to reduce their soda purchases. Despite this trend, Coca-Cola reported strong earnings for the second quarter, buoyed by solid global demand for its beverages, which allowed the company to increase its full-year guidance.
Coca-Cola CEO James Quincey expressed optimism about the company’s performance, citing significant growth in both top-line and operating income amid shifting market conditions. However, the company observed a 1% decline in volume sales in North America during this quarter. Quincey noted that this decline in the U.S. stemmed from reduced sales in “away-from-home channels,” which encompass water, sports drinks, coffee, tea, and soda products.
This decrease was somewhat mitigated by sales of Fairlife milk and Coca-Cola’s flagship soda, which ranked first and second in retail sales growth for the quarter, respectively. To counter the drop in soda sales, Coca-Cola is collaborating with restaurant chains to include its sodas in combo meal offerings. Reports indicate that the company is working with McDonald’s to enhance its $5 meal deal that features a soft drink.
Overall, Coca-Cola surpassed analysts’ expectations, reporting $12.4 billion in revenue for the second quarter, translating to approximately $0.84 per share. Analysts had anticipated revenue of around $11.76 billion, or roughly $0.81 per share.
The company has now revised its forecast for organic revenue growth to between 9% and 10%, an increase from the prior estimate of 8% to 9%.
PepsiCo, like Coca-Cola, faces challenges in capturing the attention of U.S. consumers who are shifting toward products that align with weight loss and healthier lifestyles. A recent Gallup poll indicates that young adults in the U.S. are consuming significantly less alcohol than before. Pepsi attributed its lackluster performance in the second quarter partly to a series of product recalls.