Weight loss medications and non-alcoholic beverage options are causing consumers in the U.S. to hesitate before purchasing sodas. Despite this trend, Coca-Cola reported strong earnings for the second quarter, largely due to robust global demand for its beverage products. This performance has prompted the company to increase its full-year financial outlook.
Coca-Cola’s CEO, James Quincey, expressed optimism about the company’s second-quarter results, which demonstrated healthy revenue and operating income growth amid a shifting market.
In North America, however, volume sales declined by 1% during this quarter. Quincey attributed the decrease in the U.S. to “softness in away-from-home channels,” which encompasses a variety of beverage products, including water, sports drinks, coffee, tea, and sodas.
Coca-Cola stated that this decline was somewhat mitigated by the success of its Fairlife milk brand and its flagship soda, Coke, which ranked first and second in retail sales growth for the quarter.
To combat the volume drop, Quincey mentioned that Coca-Cola is collaborating with food chains to integrate its sodas into combo meal offerings. The company is reportedly working with McDonald’s to enhance the appeal of the fast-food chain’s $5 meal deal, which includes a soft drink.
Overall, Coca-Cola surpassed Wall Street’s expectations during the second quarter, reporting revenues of $12.4 billion, equating to approximately $0.84 per share. Analysts had anticipated $11.76 billion in revenue and $0.81 per share.
The company has adjusted its forecast, predicting organic revenue growth between 9% and 10%, up from the previous estimate of 8% to 9%.
Similarly, PepsiCo is facing challenges in attracting U.S. consumers who are increasingly leaning towards products emphasizing weight loss and healthier choices. A Gallup poll indicates that young adults in the U.S. are consuming significantly less alcohol than before. In early July, Pepsi cited multiple product recalls as a reason for its lackluster performance in the second quarter.