In the United States, weight loss medications and non-alcoholic alternatives are causing consumers to hold back on purchasing sodas. Despite this trend, Coca-Cola reported strong earnings for the second quarter, driven by solid global demand for its beverage products. This success has led the company to raise its full-year forecast.
CEO James Quincey expressed optimism about the second-quarter results, highlighting the company’s growth in operating income and revenue amidst a shifting market landscape.
Despite overall success, Coca-Cola faced a 1% decline in volume sales in North America during the quarter. Quincey noted that the drop in sales for the U.S. division was mainly due to weakened demand in away-from-home segments, which covers products like water, sports drinks, coffee, tea, and sodas. The decline was somewhat mitigated by strong performances from Fairlife milk and Coke, which ranked first and second in retail sales growth, respectively.
To combat the volume decline, Coca-Cola is cooperating with food chains to include its sodas in combo meals. Reports indicate that the beverage giant is collaborating with McDonald’s to enhance the fast-food chain’s $5 meal deal, which features a soft drink.
Coca-Cola outperformed Wall Street predictions, generating $12.4 billion in revenue, equivalent to about $0.84 a share. Analysts had anticipated revenue around $11.76 billion and earnings of approximately $0.81 a share.
Looking ahead, Coca-Cola has increased its forecast for organic revenue growth to a range of 9% to 10%, up from the prior estimate of 8% to 9%.
Like Coca-Cola, Pepsi is facing challenges attracting U.S. consumers who are increasingly favoring options that focus on weight loss and healthier habits. Additionally, a recent Gallup poll indicates that young adults in the U.S. are consuming significantly less alcohol compared to previous years. In early July, Pepsi attributed its lackluster second quarter to a series of product recalls.