Weight loss medications and non-alcoholic alternatives are leading consumers in the U.S. to buy fewer sodas.
Despite this trend, Coca-Cola announced strong earnings for the second quarter, fueled by healthy global demand for its beverage products. This prompted the company to revise its full-year projections upward.
“We are encouraged by our second-quarter results, which showed solid topline and operating income growth in a constantly changing environment,” stated James Quincey, CEO of Coca-Cola.
However, Coca-Cola experienced a 1% decline in volume sales in North America during the quarter. Quincey noted in a call with investors that this decrease was due to lower sales in “away-from-home channels,” which encompass its offerings like water, sports drinks, coffee, tea, and soda.
The decline was somewhat balanced by strong performance from Fairlife milk and the Coca-Cola soda brand, which ranked first and second in retail sales growth respectively for the quarter.
To combat the volume decrease, Quincey indicated that Coca-Cola is partnering with food chains to include its soda in combo meals. The company is reportedly collaborating with McDonald’s to enhance its $5 meal deal, which features a soft drink.
Coca-Cola’s overall performance exceeded Wall Street’s expectations, as the company reported $12.4 billion in revenue for the second quarter, translating to about $0.84 per share. Analysts had anticipated revenue of $11.76 billion, or roughly $0.81 per share, according to FactSet.
Looking ahead, the company now expects organic revenue growth between 9% and 10%, an increase from its earlier forecast of 8% to 9%.
Similarly, Pepsi is facing challenges in attracting U.S. consumers, who are gravitating toward products focused on weight loss and healthier lifestyles. A Gallup poll indicated that young adults in the U.S. are drinking significantly less alcohol than before. In early July, Pepsi cited a series of product recalls as a reason for its lackluster second-quarter performance.