Weight loss medications and non-alcoholic alternatives have led to a decrease in soda consumption among U.S. consumers.
Jerome Powell’s keynote speech at Jackson Hole this Friday is anticipated to influence financial markets, and investors are keen to watch for insights.
Despite these market challenges, Coca-Cola reported strong second-quarter earnings on Tuesday, bolstered by robust global demand for its beverage products, which prompted the company to revise its full-year outlook upward.
Coca-Cola 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.”
In North America, however, volume sales dipped by 1% during the quarter. Quincey attributed the decline in the U.S. market to “softness in away-from-home channels,” which encompass water, sports drinks, coffee, tea, and sodas.
The drop in volume was somewhat mitigated by the success of Fairlife milk and Coca-Cola itself, which ranked first and second in retail sales growth for the quarter.
To counteract the downturn, Quincey mentioned that Coca-Cola is collaborating with food chains to incorporate its sodas into combo meals. Reports indicate that the company is partnering with McDonald’s to enhance the fast-food chain’s $5 meal deal, which includes a soft drink.
Overall, Coca-Cola surpassed Wall Street’s expectations, reporting $12.4 billion in revenue for the second quarter, equivalent to approximately $0.84 per share. Analysts had predicted revenue of $11.76 billion, or about $0.81 per share, according to FactSet.
The company has raised its forecast for organic revenue growth to between 9% and 10%, improving upon the earlier estimate of 8% to 9%.
In a similar situation, Pepsi is facing challenges in attracting U.S. consumers who are increasingly leaning towards products aimed at weight loss and healthier lifestyles. Additionally, a Gallup poll indicates that young adults in the U.S. are consuming significantly less alcohol than before. Earlier this July, Pepsi cited a series of product recalls as a reason for its lower performance in the second quarter.