Consumers in the United States are increasingly holding off on purchasing sodas, influenced by the popularity of weight loss medications and non-alcoholic beverages. Despite these trends, Coca-Cola reported strong earnings for the second quarter on Tuesday, attributing the performance to robust global demand for its beverages, which led the company to raise its full-year outlook.
Coca-Cola CEO James Quincey expressed optimism about the company’s second-quarter results, highlighting significant growth in both revenue and operating income amid a shifting market. However, the company did experience a 1% decline in volume sales within North America. Quincey attributed this drop to weaker performance in out-of-home consumption channels, which encompass its water, sports drinks, coffee, tea, and soda lines.
The decline in soda sales was somewhat compensated by the success of Fairlife milk products and Coca-Cola’s flagship drink, which ranked highly in retail sales growth during the quarter. To combat the volume decline further, Coca-Cola is collaborating with food chains to include its soft drinks in combo meals, particularly engaging with McDonald’s to enhance its $5 meal deal that features a soft drink.
Coca-Cola exceeded Wall Street’s expectations for the quarter, reporting $12.4 billion in revenue, equating to about $0.84 per share. Analysts had anticipated revenue of $11.76 billion, or approximately $0.81 per share, according to FactSet.
Looking ahead, Coca-Cola has raised its forecast for organic revenue growth to between 9% and 10%, revising its earlier estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in capturing the attention of U.S. consumers who are increasingly focused on health and wellness products. Young adults are reportedly drinking less alcohol, contributing to this trend. Earlier in July, Pepsi cited a range of product recalls as a reason for its lackluster performance in the second quarter.