Weight loss medications and non-alcoholic alternatives are causing U.S. consumers to rethink their soda purchases. Despite this trend, Coca-Cola reported strong earnings for the second quarter, buoyed by a global demand for its beverage products, leading the company to increase its full-year guidance.
Coca-Cola’s CEO, James Quincey, expressed optimism about the company’s performance, highlighting solid growth in both revenue and operating income amidst a changing market landscape.
However, the company experienced a 1% decline in volume sales in North America during the quarter. Quincey noted that this decrease was influenced by “softness in away-from-home channels,” which encompasses categories like water, sports drinks, coffee, tea, and soda.
Despite the decline, Coca-Cola’s offerings, including Fairlife milk and its flagship soda, Coke, saw positive retail sales growth. To combat the falling volumes, the company is collaborating with fast food chains to integrate its sodas into combo meal deals, specifically noting efforts with McDonald’s to enhance the appeal of their $5 meal deal.
In financial terms, Coca-Cola surpassed Wall Street’s expectations, reporting $12.4 billion in revenue for the second quarter, which translates to approximately $0.84 per share, exceeding forecasts of $11.76 billion and $0.81 per share.
In light of this performance, the company revised its forecast for organic revenue growth to a range of 9% to 10%, up from a previous estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in the U.S. market, where consumers are gravitating towards weight loss-focused products and healthier options. A recent Gallup poll indicates a significant decrease in alcohol consumption among young adults. In early July, Pepsi attributed its lackluster second quarter results to multiple product recalls.