Weight loss medications and non-alcoholic alternatives are making U.S. consumers more hesitant to purchase sodas. 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’s CEO, James Quincey, expressed optimism about the second-quarter results, highlighting solid growth in revenue and operating income amid a changing market environment. However, the company did see a 1% decline in volume sales in North America, attributed to weaker performance in away-from-home channels, which include water, sports drinks, coffee, tea, and soda products.
To counter this decline, Coca-Cola performed well with its Fairlife milk brand and its traditional Coke product, both experiencing significant retail sales growth during the quarter. Quincey noted that Coca-Cola is collaborating with restaurant chains to integrate its sodas into combo meals, specifically mentioning efforts with McDonald’s to enhance their $5 meal deal that includes a soft drink.
Overall, Coca-Cola exceeded analysts’ expectations, reporting $12.4 billion in revenue for the second quarter, equating to approximately $0.84 per share, surpassing the expected $11.76 billion in revenue and $0.81 per share forecasted by FactSet.
The company also revised its forecast for organic revenue growth to between 9% and 10%, increasing its previous estimate of 8% to 9%.
Pepsi is facing similar challenges as it seeks to engage a U.S. consumer base 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. In early July, Pepsi attributed its lackluster second quarter performance to a series of product recalls.