In the United States, consumers are turning away from soda in favor of weight loss medications and non-alcoholic alternatives. Despite this trend, Coca-Cola announced robust earnings for the second quarter, benefiting from strong global demand for its beverages, which prompted the company to raise its full-year forecasts.
Coca-Cola’s CEO, James Quincey, expressed optimism about the company’s performance, noting solid growth in revenue and operating income in a constantly shifting market. However, the company reported a 1% decline in volume sales in North America during the quarter. Quincey attributed the decline in the U.S. to weaker performances in “away-from-home channels,” which encompass its water, sports drinks, coffee, tea, and soda segments.
To combat the sales drop, Coca-Cola’s Fairlife milk and its flagship soda, Coke, posted strong retail sales growth, helping to mitigate the overall decline. The company is also collaborating with food chains to include its sodas in combo meals, with efforts noted to enhance McDonald’s $5 meal deal.
Coca-Cola exceeded Wall Street expectations by reporting $12.4 billion in revenue for the second quarter, translating to approximately $0.84 per share, surpassing analysts’ forecasts of $11.76 billion or around $0.81 per share.
As a result, the company has raised its outlook for organic revenue growth to between 9% and 10%, up from the earlier estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in attracting U.S. consumers, who are increasingly focused on healthier choices and weight-loss products. A Gallup poll indicated that young adults in the U.S. are consuming significantly less alcohol than before. Pepsi recently attributed its lagging performance in the second quarter to a series of product recalls.