Weight loss medications and a rise in non-alcoholic beverage options are causing American consumers to reduce their soda purchases. Despite this trend, Coca-Cola reported strong second-quarter earnings, thanks in part to robust global demand for its products, which led the company to increase its full-year outlook.
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.”
However, the company experienced a 1% decline in volume sales in North America during the quarter. Quincey mentioned that the downturn in the U.S. market was largely due to “softness in away-from-home channels,” which encompasses its range of products including water, sports drinks, coffee, tea, and sodas.
This sales drop was somewhat counterbalanced by the success of its Fairlife milk products and its flagship soda, Coke, which ranked first and second in retail sales growth respectively during the same period.
To address the decline in sales, Quincey noted Coca-Cola’s efforts to collaborate with food chains to include its soda in combo meals. Notably, the company is partnering with McDonald’s to enhance the fast-food chain’s $5 meal deal, which features a soft drink.
Overall, Coca-Cola exceeded Wall Street’s expectations by reporting revenues of $12.4 billion, equating to about $0.84 per share, surpassing the forecasted $11.76 billion and $0.81 per share as estimated by FactSet.
The company now anticipates organic revenue growth of between 9% and 10%, an increase from its earlier prediction of 8% to 9%.
Similarly, Pepsi has faced challenges in engaging U.S. consumers, who are increasingly favoring products focused on weight loss and healthier lifestyles. According to a Gallup poll, young adults in the U.S. are consuming significantly less alcohol than before. In early July, Pepsi cited multiple product recalls as a factor contributing to its lackluster second-quarter results.