Consumers in the U.S. are increasingly avoiding sodas due to the rise of weight loss drugs and non-alcoholic alternatives. Despite this trend, Coca-Cola reported strong earnings for the second quarter on Tuesday, benefiting from substantial global demand for its beverage products. As a result, the company has raised its full-year guidance.
James Quincey, the CEO of Coca-Cola, expressed optimism about the company’s performance, noting solid growth in both revenue and operating income amidst a shifting market landscape.
However, the company’s North American volume sales saw a decline of 1% during the quarter. Quincey attributed this drop to a downturn in “away-from-home channels,” which encompasses sales of water, sports drinks, coffee, tea, and sodas.
Coca-Cola’s decline in sales was somewhat mitigated by its Fairlife milk brand and its flagship soda, Coke, which ranked among the top products in retail sales growth for the quarter. To address the decline, Quincey mentioned that Coca-Cola is collaborating with fast food outlets to include its sodas in combo meal deals. Notably, the company is partnering with McDonald’s to enhance its $5 meal deal that features a soft drink.
Coca-Cola exceeded Wall Street’s expectations, reporting revenues of $12.4 billion for the second quarter, translating to earnings of approximately $0.84 per share. Analysts had projected revenue of $11.76 billion, or about $0.81 per share.
The company has now adjusted its forecast for organic revenue growth to between 9% and 10%, an increase from its earlier estimate of 8% to 9%.
Similarly, Pepsi is also facing challenges in capturing the attention of American consumers, who are gravitating towards healthier options and weight loss-focused products. A Gallup poll indicates a noticeable decrease in alcohol consumption among young adults in the U.S. Earlier in July, Pepsi cited a series of product recalls as a factor contributing to its lackluster second-quarter performance.