Consumers in the U.S. are increasingly holding back on soda purchases, influenced by weight loss medications and non-alcoholic alternatives.
Despite this trend, Coca-Cola reported strong second-quarter earnings on Tuesday, fueled by robust global demand for its beverages, prompting the company to increase its full-year guidance.
Coca-Cola CEO James Quincey expressed optimism about the quarterly results, highlighting solid growth in both revenue and operating income in a shifting market.
However, Coca-Cola experienced a 1% decline in volume sales in North America during the same period. Quincey attributed this dip to “softness in away-from-home channels,” which encompasses its products in categories like water, sports drinks, coffee, tea, and soda.
To mitigate the decline, the company noted gains from its Fairlife milk brand and its flagship soda, Coke, which ranked first and second respectively in retail sales growth for the quarter.
To further boost sales, Quincey mentioned that Coca-Cola is collaborating with restaurant chains to include its soda in combo meals. Notably, the company is working with McDonald’s to enhance its $5 meal deal, which features a soft drink.
Overall, Coca-Cola’s performance exceeded Wall Street expectations, with second-quarter revenues reaching $12.4 billion, or approximately $0.84 per share. This was ahead of analyst predictions that anticipated revenues of $11.76 billion, or about $0.81 per share.
The company adjusted its forecast for organic revenue growth to between 9% and 10%, increasing its prior estimate of 8% to 9%.
Similar to Coca-Cola, Pepsi is facing challenges in capturing the interest of U.S. consumers, who are gravitating towards products that emphasize weight loss and healthier lifestyles. Recent survey data suggests that young adults in the country are consuming less alcohol than in the past. In early July, Pepsi cited a series of product recalls as a factor contributing to its lackluster performance in the second quarter.