Consumers in the U.S. are increasingly hesitant to purchase sodas, influenced by weight loss medications and the rise of non-alcoholic drink options. Despite this trend, Coca-Cola reported strong earnings for the second quarter, bolstered by robust global demand for its beverage products, leading the company to revise its full-year financial outlook upward.
Coca-Cola CEO James Quincey expressed optimism about the company’s performance, noting the solid growth in revenue and operating income amidst a fluctuating market environment. However, in North America, the company’s volume sales experienced a 1% decline for the quarter. Quincey attributed this drop to reduced sales in out-of-home channels, which encompass water, sports drinks, coffee, tea, and sodas.
This decline was partially mitigated by the success of Fairlife milk and the Coca-Cola brand itself, with Coke ranking first and second in retail sales growth during the quarter. To combat the decrease in soda sales, Coca-Cola is collaborating with restaurant chains to incorporate its beverages in meal combo promotions, including efforts with McDonald’s to enhance its $5 meal deal.
Overall, Coca-Cola surpassed Wall Street expectations in the second quarter, reporting revenues of $12.4 billion, equating to approximately $0.84 per share, exceeding forecasts of $11.76 billion and $0.81 per share. The company has now adjusted its forecast for organic revenue growth to a range of 9% to 10%, up from the previous estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in capturing the U.S. market, as consumers shift their preferences towards healthier products, with younger adults significantly reducing their alcohol consumption, according to a Gallup poll. In early July, Pepsi attributed its weaker second-quarter results to a series of product recalls.