Weight loss medications and the rise of non-alcoholic beverages are causing American consumers to reduce their soda purchases. Despite this trend, Coca-Cola announced solid second-quarter earnings on Tuesday, buoyed by strong global demand for its products, and raised its forecasts for the year.
Coca-Cola’s 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, the company experienced a 1% decline in volume sales in North America during the quarter. Quincey attributed this drop to “softness in away-from-home channels,” which include its water, sports drinks, coffee, tea, and soda offerings.
Despite the downturn, sales from Fairlife milk and Coca-Cola itself helped mitigate losses, with Coke ranking first and second in retail sales growth during the quarter.
To counter the volume decline, Coca-Cola is collaborating with food chains to incorporate its products into combo meal deals. Reports indicate the company is working with McDonald’s to enhance its $5 meal deal, which includes a soft drink.
Overall, Coca-Cola exceeded Wall Street expectations, reporting $12.4 billion in revenue, or about $0.84 per share. Analysts had anticipated revenue of $11.76 billion, approximately $0.81 per share.
The company revised its forecast for organic revenue growth upwards, now expecting between 9% and 10%, compared to its earlier prediction of 8% to 9%.
Pepsi, like Coca-Cola, is facing challenges in attracting U.S. consumers, who increasingly prefer products focused on weight loss and healthier choices. Additionally, a Gallup poll indicates that young adults in the U.S. are consuming significantly less alcohol than before. In early July, Pepsi cited a series of product recalls as a factor in its lackluster second-quarter performance.