In the United States, the rise of weight loss medications and non-alcoholic drink alternatives has led to decreased soda purchases among consumers.
Despite this trend, Coca-Cola reported strong earnings for the second quarter, with global demand for its products contributing to revised annual projections. CEO James Quincey expressed optimism about the company’s performance, highlighting solid growth in revenue and operating income during a period of market volatility.
However, Coca-Cola experienced a 1% decline in volume sales in North America. During the earnings call, Quincey attributed the decrease to lower sales in “away-from-home channels,” which encompass water, sports drinks, coffee, tea, and sodas. The drop was mitigated by growth in Fairlife milk and Coca-Cola itself, which ranked highly in retail sales during the quarter.
To combat declining sales, Coca-Cola plans to collaborate with fast food chains to integrate its beverages into combo meals. Reports indicate that the company is working with McDonald’s to enhance its $5 meal deal, including a soft drink.
Coca-Cola exceeded analysts’ expectations with second-quarter revenues of $12.4 billion, translating to approximately $0.84 per share. Financial projections had anticipated revenue of around $11.76 billion, or $0.81 per share, according to FactSet.
The company has now increased its forecast for organic revenue growth to between 9% and 10%, up from an earlier estimate of 8% to 9%.
Similar to Coca-Cola, Pepsi is facing challenges in attracting American consumers, who are increasingly gravitating towards health-conscious products. A Gallup poll indicates that young adults in the U.S. are drinking significantly less alcohol than in previous years. In July, Pepsi attributed its weaker second-quarter performance to a series of product recalls.