In the U.S., consumer interest in weight loss drugs and non-alcoholic beverages is impacting soda sales. Despite this trend, Coca-Cola reported strong earnings for the second quarter, fueled by robust global demand for its beverage offerings. The company raised its full-year guidance based on these positive results.
Coca-Cola’s CEO, James Quincey, expressed optimism about their second-quarter performance, which showed significant revenue and operating income growth despite the changing market dynamics. However, the company experienced a 1% decline in volume sales in North America. During a recent earnings call, Quincey attributed this decrease to lower sales in “away-from-home channels,” which encompass its water, sports drinks, coffee, tea, and soda products.
This decline was somewhat mitigated by the strong performance of Fairlife milk and Coca-Cola itself, which ranked first and second in retail sales growth for the quarter. To tackle the volume decline, Coca-Cola is collaborating with food chains to include its sodas in combo meals. Reports indicate that the beverage giant is working with McDonald’s to enhance the appeal of its $5 meal deal, which includes a soft drink.
Ultimately, Coca-Cola surpassed Wall Street’s expectations, reporting $12.4 billion in revenue for the second quarter, which translated to approximately $0.84 per share. Analysts had predicted revenues of $11.76 billion and earnings of around $0.81 per share.
The company has now revised its guidance for organic revenue growth to a range of 9% to 10%, an increase from the prior estimate of 8% to 9%.
Similarly, Pepsi has been facing challenges appealing to U.S. consumers who are leaning towards products that emphasize weight loss and healthier lifestyle choices. A recent Gallup poll indicated that young adults in the U.S. are consuming significantly less alcohol than in previous years. In early July, Pepsi cited a series of product recalls as a factor in its lackluster second-quarter performance.