Consumers in the U.S. are increasingly refraining from purchasing sodas, influenced by weight loss medications and non-alcoholic alternatives.
In this context, Coca-Cola reported strong second-quarter results, significantly boosted by solid global demand for its beverage products, which led the company to raise its annual forecast.
“We are encouraged by our second-quarter results, which showcased robust topline and operating income growth in a constantly changing market,” said Coca-Cola CEO James Quincey.
Despite this success, the company faced a 1% decline in volume sales in North America. During a recent earnings call, Quincey attributed this downturn in the U.S. sector to “softness in away-from-home channels,” which includes its products in water, sports drinks, coffee, tea, and soda.
The decline in overall volume sales was somewhat mitigated by the performance of Fairlife milk and the Coca-Cola brand itself, which ranked first and second in retail growth during the quarter.
To counteract the sales drop, Quincey mentioned that Coca-Cola is partnering with food chains to incorporate its sodas into combo meals. The company is said to be collaborating with McDonald’s to enhance the fast-food chain’s $5 meal deal that includes a soft drink.
Despite the challenges, Coca-Cola exceeded Wall Street’s forecasts with reported revenues of $12.4 billion for the second quarter, translating to approximately $0.84 per share. Analysts had anticipated around $11.76 billion in revenue, or roughly $0.81 per share, as per FactSet.
The company has revised its outlook for organic revenue growth to between 9% and 10%, up from the prior prediction of 8% to 9%.
Pepsi, like Coca-Cola, has been struggling to attract U.S. consumers who are leaning towards healthier options and weight loss strategies. A recent Gallup poll highlighted a decline in alcohol consumption among young adults in the U.S. Earlier this month, Pepsi attributed a series of product recalls to its lackluster performance in the second quarter.