Consumers in the U.S. are increasingly hesitant to purchase sodas, influenced by the rise of weight loss medications and non-alcoholic alternatives.
Despite this trend, Coca-Cola reported strong earnings for the second quarter on Tuesday, bolstered by global demand for its beverage offerings. The company has subsequently raised its full-year revenue projections.
CEO James Quincey described the second-quarter results as encouraging, noting solid growth in both revenue and operating income amid changing market conditions.
However, Coca-Cola’s volume sales in North America experienced a slight decline of 1% during the quarter. Quincey mentioned during the earnings call that this drop was largely due to weaker sales in “away-from-home channels,” which encompass water, sports drinks, coffee, tea, and sodas.
This decline was partially mitigated by the success of its Fairlife milk and its flagship soda, Coke, which ranked first and second in retail sales growth, respectively.
To combat sales declines, Coca-Cola is collaborating with fast-food chains to integrate its sodas into combo meal deals. Notably, the company is working with McDonald’s to enhance its $5 meal deal that includes a soft drink.
Overall, Coca-Cola exceeded market expectations, reporting $12.4 billion in revenue for the second quarter, translating to around $0.84 per share. Analysts had anticipated revenue of $11.76 billion, or approximately $0.81 per share.
Following this performance, Coca-Cola adjusted its forecast for organic revenue growth from a prior estimate of 8% to 9% to a new range of 9% to 10%.
Similarly, Pepsi is facing challenges in engaging U.S. consumers, who are leaning towards healthier options and weight loss products. A Gallup poll indicates that young adults in the U.S. are also consuming significantly less alcohol than before. In early July, Pepsi attributed its lackluster second quarter results to a number of product recalls.