Weight loss medications and non-alcoholic beverage alternatives have led U.S. consumers to reduce their soda consumption.
Despite this trend, Coca-Cola reported strong second-quarter earnings, highlighting significant global demand for its beverage offerings, which prompted the company to raise its full-year financial outlook.
CEO James Quincey expressed optimism about the results, stating, “We are encouraged with our second-quarter results, which delivered solid topline and operating income growth in an ever-changing landscape.”
Nonetheless, Coca-Cola experienced a 1% decline in volume sales in North America during the quarter. Quincey pointed out that this decrease was largely due to lower sales in “away-from-home channels,” which encompass beverages sold outside of home, including water, sports drinks, coffee, tea, and soda.
The decline was somewhat mitigated by the performance of its Fairlife milk line and its flagship soda, Coke, both of which achieved notable growth in retail sales during the quarter.
To counterbalance the dip in sales, Quincey mentioned that Coca-Cola is collaborating with food chains to include its soda in combo meals. The company has reportedly partnered with McDonald’s to enhance the fast-food chain’s $5 meal deal, which includes a soft drink.
Overall, Coca-Cola surpassed Wall Street’s expectations with second-quarter revenue of $12.4 billion, equating to approximately $0.84 per share. Analysts had anticipated revenue of $11.76 billion, or around $0.81 per share.
The company has now adjusted its forecast for organic revenue growth to between 9% and 10%, an increase from the previous estimate of 8% to 9%.
Similarly, Pepsi has also faced challenges in attracting U.S. consumers, who are gravitating towards weight-loss-focused and healthier products. A Gallup poll indicated that young adults in the U.S. are consuming significantly less alcohol than in the past. In early July, Pepsi attributed its lackluster second quarter to a series of product recalls.