Consumers in the U.S. are delaying soda purchases due to the rise of weight loss medications and non-alcoholic drink options. Despite this trend, Coca-Cola reported strong second-quarter earnings, fueled by solid global demand for its beverages. This performance led the company to revise its full-year forecasts upward.
Coca-Cola’s CEO, James Quincey, expressed optimism regarding the second-quarter results, highlighting substantial growth in both revenue and operating income amid a shifting market landscape. However, the company did experience a 1% decline in sales volume in North America during the quarter. Quincey attributed this drop primarily to reduced activity in away-from-home channels, which encompass water, sports drinks, coffee, tea, and soda.
Notably, the decline in volume was somewhat mitigated by the success of Fairlife milk and Coca-Cola’s soft drink offerings, which ranked first and second in retail sales growth for the quarter. To combat the sales downturn, Quincey announced that Coca-Cola is collaborating with food chains to incorporate its sodas into combo meals, specifically partnering with McDonald’s to enhance the fast food chain’s $5 meal deal that includes a soft drink.
Overall, Coca-Cola exceeded analysts’ expectations, reporting $12.4 billion in revenue for the second quarter, equating to approximately $0.84 per share. This surpassed the anticipated revenue of $11.76 billion and earnings of $0.81 per share, as forecasted by FactSet.
In light of changing consumer preferences, Pepsi has also been facing challenges in engaging U.S. consumers, who are increasingly gravitating towards healthier and weight-conscious options. Recent data indicates a significant reduction in alcohol consumption among young adults. In July, Pepsi attributed its lackluster second-quarter results to a number of product recalls.