The demand for weight loss drugs and non-alcoholic beverages is leading many consumers in the U.S. to limit their soda purchases. Despite this trend, Coca-Cola reported strong earnings for the second quarter, attributing its success to robust global demand for its products, which allowed the company to raise its full-year forecasts.
Coca-Cola CEO James Quincey expressed satisfaction with the company’s performance, noting solid revenue and operating income growth despite a challenging market. However, the North American sector saw a 1% decline in volume sales, which Quincey attributed to a downturn in “away-from-home channels,” encompassing water, sports drinks, coffee, tea, and sodas.
Part of the sales decline was balanced by strong performances from its Fairlife milk line and its signature soda, Coca-Cola, which ranked first and second in retail sales growth, respectively. To counter the declining soda sales, Quincey mentioned collaborations with food chains to incorporate Coca-Cola beverages into combo meal offerings. The company is particularly focused on enhancing its partnership with McDonald’s, aiming to improve the fast-food chain’s $5 meal deal that includes a soft drink.
In financial terms, Coca-Cola outperformed Wall Street expectations, generating $12.4 billion in revenue for the second quarter, amounting to around $0.84 per share. Analysts had anticipated revenues of $11.76 billion, or roughly $0.81 per share.
Coca-Cola has increased its forecast for organic revenue growth to between 9% and 10%, revising its earlier estimate of 8% to 9%.
Meanwhile, PepsiCo is also facing challenges in engaging U.S. consumers, who are increasingly favoring health-oriented products and weight loss options. A recent Gallup poll indicates that young adults in the U.S. are consuming significantly less alcohol than before. In early July, Pepsi attributed its lackluster second-quarter results to a series of product recalls.