Weight loss medications and non-alcoholic alternatives are causing a shift in consumer preferences, leading some in the U.S. to purchase fewer sodas. Despite this trend, Coca-Cola reported strong second-quarter earnings on Tuesday, attributed to high global demand for its beverage selections, which has led the company to revise its full-year forecast upwards.
Coca-Cola CEO James Quincey expressed optimism about the second-quarter results, highlighting significant growth in revenue and operating income in a fluctuating market. However, in North America, the company experienced a 1% decline in volume sales during this quarter. Quincey noted that the downturn in the U.S. was due to “softness in away-from-home channels,” while demand for products like Fairlife milk and Coke itself helped mitigate the overall drop.
To address this volume decrease, Coca-Cola is collaborating with food chains to incorporate soda into combo meal offerings. There are reports of a partnership with McDonald’s aimed at enhancing the fast-food chain’s $5 meal deal, which includes a soft drink.
Coca-Cola’s performance exceeded Wall Street’s expectations, reporting revenues of $12.4 billion for the second quarter, approximately $0.84 per share. Analysts had predicted the company would generate revenue of $11.76 billion, or about $0.81 per share.
The company now anticipates organic revenue growth of 9% to 10%, raising its previous guidance of 8% to 9%.
Similarly, Pepsi is facing challenges in attracting U.S. customers, who are now favoring healthier options and weight-loss products. A recent Gallup poll shows a significant drop in alcohol consumption among young adults in the U.S. Earlier in July, Pepsi attributed its lackluster second-quarter performance to a series of product recalls.