Consumers in the U.S. are delaying soda purchases, influenced by the popularity of weight loss medications and non-alcoholic beverage options. Despite this trend, Coca-Cola reported strong second-quarter earnings, bolstered by high global demand for its beverage products, leading the company to increase its annual guidance.
Coca-Cola CEO James Quincey expressed optimism about the company’s performance, stating that the results reflected solid growth in revenue and operating income amid a fluctuating market.
However, North American volume sales saw a 1% decline during the quarter. Quincey attributed this drop to decreased activity in away-from-home channels, which includes water, sports drinks, coffee, tea, and sodas. He noted that the downturn was slightly balanced by the success of its Fairlife milk and the iconic Coke, which ranked first and second in retail sales growth, respectively.
To counter the sales decline, Coca-Cola is collaborating with food chains to incorporate its soda into combo meals. The company is reportedly working with McDonald’s to enhance the fast-food chain’s $5 meal deal, which features a soft drink.
Coca-Cola’s performance surpassed Wall Street expectations, reporting $12.4 billion in revenue and earnings of approximately $0.84 per share, compared to analysts’ forecast of $11.76 billion in revenue and earnings of about $0.81 per share.
The company has raised its forecast for organic revenue growth to between 9% and 10%, an increase from the previous estimate of 8% to 9%.
Similarly, Pepsi is also facing challenges in attracting U.S. consumers, who are leaning more towards products that focus on weight loss and healthier lifestyles. A recent Gallup poll indicates that young adults in the U.S. are reducing their alcohol consumption significantly. In early July, Pepsi attributed its lackluster second-quarter results to a series of product recalls.