Consumers in the U.S. are refraining from purchasing sodas, influenced by the rising popularity of weight loss drugs and non-alcoholic alternatives.
Despite these challenges, Coca-Cola reported strong second-quarter earnings, reflecting robust global demand for its beverage offerings, which led the company to raise its full-year outlook. CEO James Quincey expressed optimism about the results, noting solid growth in both revenue and operating income amid a changing market.
In North America, however, Coca-Cola experienced a 1% decline in volume sales for the quarter. Quincey indicated that the downturn in their U.S. division resulted from lower demand in “away-from-home channels,” which encompass water, sports drinks, coffee, tea, and soda.
The decline was partly mitigated by the success of Fairlife milk and Coca-Cola itself, which saw first and second place in retail sales growth, respectively. To combat declining sales, Quincey mentioned that Coca-Cola is collaborating with food chains to incorporate its sodas into combo meals, specifically mentioning efforts with McDonald’s to enhance its $5 meal deal that includes a soft drink.
Coca-Cola’s performance surpassed Wall Street predictions, with reported revenues of $12.4 billion for the second quarter, amounting to approximately $0.84 per share. Analysts had projected revenues of $11.76 billion and earnings of roughly $0.81 per share.
The company now anticipates organic revenue growth of 9% to 10%, an increase from its earlier forecast of 8% to 9%.
Similarly, Pepsi is facing difficulties in attracting U.S. consumers who are increasingly drawn to weight loss products and healthier lifestyle choices. Recent polling data suggests that young adults in the U.S. are drinking significantly less alcohol than before. In early July, Pepsi attributed its lackluster performance in the second quarter to a series of product recalls.