Weight loss medications and a shift toward non-alcoholic beverages are causing consumers in the U.S. to hold back on soda purchases. Despite this trend, Coca-Cola reported strong earnings for the second quarter, driven by high global demand for its beverages, leading the company to raise its full-year outlook.
Coca-Cola CEO James Quincey expressed optimism about the company’s performance, stating, “We are encouraged with our second-quarter results, which delivered solid topline and operating income growth in an ever-changing landscape.”
However, volume sales in North America saw a decline of 1% during the quarter. Quincey noted that reduced sales in the U.S. were influenced by “softness in away-from-home channels,” which encompass water, sports drinks, coffee and tea, as well as soda products.
The company pointed out that this decline was somewhat mitigated by its Fairlife milk and Coke soda offerings, which ranked first and second in retail sales growth for the quarter. To counteract the volume decrease, Coca-Cola is collaborating with food chains to incorporate its soda into combo meal deals. Reports suggest a partnership with McDonald’s to enhance its $5 meal deal that includes a soft drink.
Overall, Coca-Cola surpassed Wall Street’s expectations with second-quarter revenue of $12.4 billion, translating to around $0.84 per share, compared to the anticipated $11.76 billion and approximately $0.81 per share, as per FactSet.
The company has now projected organic revenue growth between 9% and 10%, an increase from its previous estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in capturing the attention of U.S. consumers, who are increasingly focused on weight loss and healthier choices. A recent Gallup poll indicates that young adults in the U.S. are consuming significantly less alcohol than before. Earlier this month, Pepsi attributed its disappointing second quarter results to several product recalls.