Consumers in the U.S. are increasingly hesitant to purchase sodas due to the rise of weight loss drugs and non-alcoholic beverages. Despite this trend, Coca-Cola reported strong second-quarter earnings on Tuesday, bolstered by robust global demand for its products, leading the company to elevate its full-year projections.
Coca-Cola’s CEO, James Quincey, expressed optimism about the company’s performance, highlighting solid revenue and operating income growth amidst a shifting market landscape. However, the company saw a 1% decline in volume sales in North America for the quarter. Quincey noted that this drop was influenced by reduced sales in “away-from-home channels,” which encompass products like water, sports drinks, coffee, tea, and soda.
The decrease was somewhat mitigated by growth in Coca-Cola’s Fairlife milk line and its classic soda, Coke, which ranked first and second in retail sales growth, respectively, during the quarter. To counteract the volume drop, Quincey mentioned efforts to collaborate with food chains, aiming to incorporate soda into combo meals. Notably, Coca-Cola is said to be partnering with McDonald’s to enhance its $5 meal deal, which includes a soft drink.
In financial terms, Coca-Cola exceeded Wall Street’s expectations with reported revenue of $12.4 billion, translating to approximately $0.84 per share. Analysts had projected earnings of around $11.76 billion, or roughly $0.81 per share.
The company has now adjusted its forecast for organic revenue growth to a range of 9% to 10%, an increase from its previous estimate of 8% to 9%.
Meanwhile, Pepsi is facing similar challenges in attracting U.S. consumers, who are gravitating more towards products that support weight loss and healthy lifestyles. A Gallup poll indicates that young adults in the U.S. are drinking significantly less alcohol than in previous years. Earlier in July, Pepsi attributed its lackluster second quarter to a series of product recalls.