In the United States, consumers are increasingly hesitant to purchase sodas, largely due to the popularity of weight loss medications and non-alcoholic alternatives.
Despite this trend, Coca-Cola reported strong earnings for the second quarter, primarily fueled by robust global demand for its beverage offerings, which led the company to raise its full-year guidance. “We are encouraged by our second-quarter results, which delivered solid topline and operating income growth in an ever-changing landscape,” said CEO James Quincey.
However, Coca-Cola faced a 1% decline in volume sales in North America during the quarter, attributed to “softness in away-from-home channels,” including water, sports drinks, coffee, tea, and soda. This decline was somewhat mitigated by strong performance from its Fairlife milk product and its flagship soda, which ranked first and second in retail sales growth, respectively.
To counteract the drop in volume, Quincey mentioned that Coca-Cola is collaborating with food chains to incorporate its soda into combo meals. The company is reportedly working with McDonald’s to enhance the fast food chain’s $5 meal deal, which includes a soft drink.
Overall, Coca-Cola exceeded Wall Street expectations with second-quarter revenue of $12.4 billion, translating to about $0.84 per share, compared to the anticipated revenue of $11.76 billion and earnings of roughly $0.81 per share. The company now projects organic revenue growth to reach between 9% and 10%, adjusting its earlier forecast of 8% to 9%.
Similarly, Pepsi is grappling with diminished consumer interest in the U.S. market, as consumers increasingly lean towards products that support weight loss and health-conscious lifestyles. According to a Gallup poll, young adults in the U.S. are consuming significantly less alcohol than in the past. In early July, Pepsi attributed its lackluster second quarter to a series of product recalls.