Consumers in the U.S. are increasingly delaying their soda purchases due to the rise of weight loss drugs and non-alcoholic beverage options.
Despite this trend, Coca-Cola reported strong second-quarter earnings, driven by robust global demand for its products. The beverage giant also upgraded its full-year guidance as a result.
Coca-Cola’s CEO, James Quincey, expressed optimism about the company’s second-quarter results, highlighting solid growth in revenue and operating income despite the changing market dynamics. However, in North America, volume sales fell by 1% during the quarter, a decrease attributed to weaker performance in away-from-home channels, which encompasses products like water, sports drinks, coffee, tea, and sodas.
The sales decline was somewhat mitigated by the popularity of Fairlife milk and Coca-Cola itself, which ranked high in retail sales growth during this period. To boost soda sales, Quincey noted that Coca-Cola is collaborating with food chains to integrate its beverages into combo meals. The company is reportedly working with McDonald’s to enhance its $5 meal deal that includes a soft drink.
Coca-Cola exceeded Wall Street expectations, reporting revenues of $12.4 billion for the second quarter, translating to about $0.84 per share, surpassing the forecast of $11.76 billion or approximately $0.81 per share.
The company now anticipates organic revenue growth of 9% to 10%, an improvement from its earlier estimate of 8% to 9%.
Similarly, Pepsi faces challenges in attracting U.S. consumers, who are leaning towards products that support weight loss and healthier lifestyles. A recent Gallup poll indicates that 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.