In the U.S., consumers are holding back on soda purchases, influenced by the rise of weight loss drugs and non-alcoholic alternatives.
Despite this trend, Coca-Cola reported strong second-quarter earnings on Tuesday, buoyed by robust global demand for its beverages. This performance prompted the company to raise its full-year forecasts. Coca-Cola’s CEO James Quincey expressed optimism about the results, highlighting both revenue and operating income growth amidst shifting market conditions.
However, the North American market saw a 1% decline in volume sales. Quincey attributed this drop in the U.S. division to weaker sales in “away-from-home channels,” which encompass products like water, sports drinks, coffee, tea, and soda.
Coca-Cola noted that the decline was somewhat mitigated by its Fairlife milk and the Coke brand, which ranked first and second in retail sales growth for the quarter. To counteract the volume drop, Quincey mentioned that Coca-Cola is collaborating with food chains to integrate its soda products into combo meal deals. They are reportedly working with McDonald’s to enhance the fast food chain’s $5 meal deal that includes a soft drink.
Overall, Coca-Cola surpassed Wall Street expectations, reporting second-quarter revenues of $12.4 billion, translating to approximately $0.84 per share. Analysts had predicted revenues of $11.76 billion, or about $0.81 per share, according to FactSet.
The company has raised its forecast for organic revenue growth to between 9% and 10%, up from a previous estimate of 8% to 9%.
Like Coca-Cola, Pepsi is facing challenges in retaining the interest of U.S. consumers, who are gravitating towards weight loss products and healthier lifestyle choices. According to a Gallup poll, young adults in the U.S. are consuming significantly less alcohol than before. In early July, Pepsi attributed its subdued second-quarter performance to a series of product recalls.