Weight loss drugs and the availability of non-alcoholic alternatives are influencing U.S. consumers to reduce their soda purchases. Despite this trend, Coca-Cola reported strong earnings for the second quarter, attributed largely to global demand for its beverage products, prompting the company to raise its full-year forecasts.
Coca-Cola’s CEO, James Quincey, expressed optimism during an earnings announcement, stating, “We are encouraged with our second-quarter results, which delivered solid topline and operating income growth in an ever-changing landscape.”
However, the beverage giant did see a 1% drop in volume sales within North America during the quarter, which Quincey attributed to a decline in consumption in “away-from-home channels,” encompassing products like water, sports drinks, coffee, tea, and soda.
This decline was partially mitigated by the success of Coca-Cola’s Fairlife milk and their flagship soda, Coke, which recorded strong retail sales growth. To further counterbalance the volume dip, Quincey mentioned that Coca-Cola is collaborating with fast-food chains to incorporate its sodas into meal deals, specifically noting efforts with McDonald’s to enhance its $5 meal offer.
Coca-Cola exceeded Wall Street estimates with reported revenues of $12.4 billion for the second quarter, translating to approximately $0.84 per share. Analysts had anticipated revenue of $11.76 billion, or roughly $0.81 per share.
The company has now adjusted its forecast, predicting organic revenue growth of 9% to 10%, up from an earlier estimate of 8% to 9%.
In a similar vein, Pepsi has also faced challenges in attracting U.S. customers, who are increasingly focusing on health-conscious products and weight loss. Recent surveys indicate that younger adults are consuming significantly less alcohol than in previous years. In July, Pepsi attributed its weak second-quarter performance to a series of product recalls.