Consumers in the U.S. are increasingly delaying soda purchases due to the rise of weight loss medications and the availability of non-alcoholic alternatives.
In contrast, Coca-Cola showed strong second-quarter earnings, driven by global demand for its beverages, leading the company to revise its full-year guidance upwards. Coca-Cola’s CEO, James Quincey, expressed optimism about the results, highlighting solid topline and operating income growth amidst changing market conditions.
Nevertheless, Coca-Cola’s North American volume sales fell by 1% during the quarter. Quincey attributed this decline to weaker sales in away-from-home channels encompassing water, sports drinks, coffee, tea, and soda products. However, this drop was partially mitigated by growth in its Fairlife milk brand and strong sales of its Coke products, which ranked first and second in retail sales growth for the quarter.
To counter the sales decline, Coca-Cola is collaborating with food chains to incorporate its soda into combo meals, including a partnership with McDonald’s aimed at enhancing its $5 meal deal, which includes a beverage.
Coca-Cola exceeded Wall Street expectations with second-quarter revenue reaching $12.4 billion, translating to about $0.84 per share, compared to analysts’ forecast 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 interest of U.S. consumers, who are increasingly favoring products that promote weight loss and healthier lifestyles. Additionally, a Gallup poll indicates that young adults in the U.S. are consuming less alcohol than in the past. Pepsi attributed its lackluster second-quarter performance to a series of product recalls in early July.