Weight loss medications and non-alcoholic alternatives are causing consumers in the United States to reduce their soda purchases. Despite this trend, Coca-Cola announced a strong performance for its second quarter, thanks in part to high global demand for its beverages, prompting the company to raise its full-year forecast.
Coca-Cola’s CEO, James Quincey, expressed optimism about the quarter, noting solid growth in both revenue and operating income amid ongoing market changes. However, the company reported a 1% decline in volume sales in North America. Quincey attributed this drop to decreased demand in away-from-home channels, which encompass various products including water, sports drinks, coffee, tea, and soda.
Despite the overall sales decline, Coca-Cola’s Fairlife milk brand and its signature soda ranked first and second in retail sales growth, respectively. To counteract the downturn in soda sales, Coca-Cola is collaborating with food chains like McDonald’s to integrate its beverages into combo meal options, such as the popular $5 meal deal that features a soft drink.
Coca-Cola’s second-quarter revenue reached $12.4 billion, exceeding Wall Street expectations, which predicted $11.76 billion. This translated to earnings of around $0.84 per share, surpassing analysts’ estimates of $0.81 per share. The company now anticipates organic revenue growth of 9% to 10%, an increase from its previous estimate of 8% to 9%.
Similarly, PepsiCo faces challenges in attracting U.S. consumers, who are increasingly opting for products that focus on health and weight management. Recent trends indicate that young adults in the U.S. are consuming less alcohol, further influencing beverage choices. In early July, Pepsi attributed its lackluster second quarter to several product recalls.