Weight loss medications and non-alcoholic alternatives are causing consumers in the U.S. to hesitate in purchasing sodas. Despite this trend, Coca-Cola reported strong second-quarter earnings, benefiting from solid global demand for its beverages, leading the company to adjust its full-year guidance upwards.
Coca-Cola’s CEO, James Quincey, expressed optimism about the second-quarter results, which showcased significant growth in both revenue and operating income amid a shifting market environment. However, in North America, volume sales dropped by 1% during the quarter. Quincey attributed this decline in the U.S. division to reduced demand in out-of-home channels, affecting water, sports drinks, coffee, tea, and soda products.
The decrease was somewhat balanced by the success of Coca-Cola’s Fairlife milk and its flagship soda, which ranked first and second in retail sales growth for the quarter. To counter the sales drop, Quincey mentioned that Coca-Cola is collaborating with restaurant chains to integrate its sodas into combo meals, including efforts with McDonald’s to enhance its $5 meal deals that feature a soft drink.
Overall, Coca-Cola surpassed Wall Street projections, reporting $12.4 billion in revenue for the second quarter, equating to approximately $0.84 per share. Analysts had anticipated revenues of around $11.76 billion, or roughly $0.81 per share.
The company now anticipates organic revenue growth of 9% to 10%, increasing its earlier estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in attracting U.S. consumers, who are leaning more towards weight-focused and healthier products. A Gallup poll indicates a noticeable reduction in alcohol consumption among young adults in the U.S. Earlier in July, Pepsi attributed its weaker second-quarter performance to a series of product recalls.