In the United States, consumers are increasingly delaying soda purchases due to the availability of weight loss drugs and non-alcoholic alternatives.
Despite this trend, Coca-Cola reported strong second-quarter earnings on Tuesday, bolstered by robust global demand for its beverage selections, which led the company to upgrade its full-year outlook.
Coca-Cola’s CEO, James Quincey, expressed optimism regarding the company’s financial performance, stating, “We are encouraged with our second-quarter results, which delivered solid topline and operating income growth in an ever-changing landscape.”
However, in North America, the company’s volume sales experienced a 1% decline during the quarter. Quincey noted that this drop for the U.S. division was influenced by “softness in away-from-home channels,” impacting various products including water, sports drinks, coffee, tea, and sodas.
The decline was partially countered by the success of Fairlife milk and Coca-Cola itself, which ranked first and second in retail sales growth for the quarter.
To address the sales downturn, Quincey mentioned that Coca-Cola is collaborating with food chains to integrate its beverages into combo meals, including efforts with McDonald’s to enhance their $5 meal deal that features a soft drink.
Overall, Coca-Cola exceeded Wall Street’s expectations, reporting revenue of $12.4 billion in the second quarter, or approximately $0.84 per share. Analysts had anticipated revenue of $11.76 billion, roughly $0.81 per share, according to FactSet.
The company has raised its forecast for organic revenue growth to between 9% and 10%, an increase from the previous estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in attracting U.S. consumers who are leaning toward weight loss-focused and healthier products. A Gallup poll indicates that young adults in the U.S. are also drinking significantly less alcohol than in prior years. Earlier in July, Pepsi attributed its lackluster second quarter to a series of product recalls.