Consumers in the U.S. are increasingly turning to weight loss medications and non-alcoholic beverages, leading to a slowdown in soda sales. Despite this trend, Coca-Cola announced strong second-quarter earnings, citing significant global demand for its beverage products. This success has prompted the company to raise its full-year guidance.
Coca-Cola’s CEO, James Quincey, expressed optimism about the results, highlighting solid growth in top-line revenue and operating income despite a challenging market environment. However, the company’s sales volume in North America fell by 1% during the quarter. Quincey noted that the decline was primarily due to weakened sales in “away-from-home channels,” which encompass its variety of beverages, including water, sports drinks, coffee, tea, and sodas.
The company managed to offset some of the volume decline with growth from its Fairlife milk products and strong sales of its flagship soda, Coca-Cola, which ranked among the top in retail sales growth this quarter.
To combat the decline in volume, Coca-Cola is partnering with food chains to integrate its sodas into meal combos. Notably, the beverage company is working with McDonald’s to enhance the value of its $5 meal deal that includes a soft drink.
Coca-Cola’s performance exceeded Wall Street expectations, reporting revenues of $12.4 billion for the second quarter, translating to approximately $0.84 earnings per share. Analysts had predicted revenues of $11.76 billion and earnings of about $0.81 per share, according to FactSet.
The company has revised its forecast for organic revenue growth, now expecting an increase between 9% and 10%, an improvement from its previous estimate of 8% to 9%.
In a similar vein, Pepsi is facing challenges as U.S. consumers shift towards health-conscious products. A recent Gallup poll shows that young adults are consuming significantly less alcohol than in the past. Earlier this month, Pepsi attributed a lackluster second-quarter performance to several product recalls.