Consumers in the U.S. are increasingly hesitant to purchase sodas due to the rising popularity of weight loss medications and non-alcoholic alternatives.
Despite these market challenges, Coca-Cola announced strong earnings for the second quarter, attributing its performance to robust global demand for its beverage products, which led the company to raise its full-year guidance. CEO James Quincey expressed optimism about the quarter’s results, highlighting solid growth in revenue and operating income amidst a shifting landscape.
However, Coca-Cola did see a 1% decline in volume sales within North America during the quarter. Quincey noted that this downturn was primarily due to weaker performance in channels outside the home, which encompass its water, sports drinks, coffee and tea, and soda lines. The decline was somewhat mitigated by success from its Fairlife milk brand and its flagship soda brand, Coke, which achieved the highest and second highest retail sales growth respectively.
To combat the sales drop, Coca-Cola is collaborating with various food chains to integrate its beverages into meal combos. The company is reportedly partnering with McDonald’s to enhance the fast food chain’s $5 meal deal, which includes a soft drink.
Overall, Coca-Cola exceeded Wall Street’s earnings expectations, reporting $12.4 billion in revenue for the second quarter, translating to approximately $0.84 per share. Analysts had predicted revenue of around $11.76 billion, or roughly $0.81 per share.
Looking ahead, Coca-Cola is now projecting organic revenue growth between 9% and 10%, an increase from its earlier prediction of 8% to 9%.
Similarly, Pepsi has faced difficulties attracting U.S. consumers, who are increasingly focused on healthier choices and weight management. A recent Gallup poll indicated a significant decline in alcohol consumption among young adults in the U.S. In early July, Pepsi attributed disappointing second quarter results to a series of product recalls.