In the U.S., consumers are increasingly delaying soda purchases due to the popularity of weight loss drugs and non-alcoholic alternatives. Despite this trend, Coca-Cola reported strong second-quarter earnings on Tuesday, driven by robust global demand for its beverage offerings. As a result, the company has raised its full-year guidance.
Coca-Cola CEO James Quincey expressed optimism about the second-quarter results, highlighting solid topline and operating income growth amid ongoing changes in the marketplace. However, North America experienced a 1% decline in volume sales for the quarter. Quincey noted that this downturn in the U.S. division was linked to weak performance in “away-from-home channels,” which encompass various products including water, sports drinks, coffee, tea, and soda.
The decline in sales was somewhat mitigated by the success of Fairlife milk and Coca-Cola’s flagship soda, which ranked first and second in retail sales growth during the quarter. To reverse the downward trend, Quincey mentioned that the company is collaborating with food chains to incorporate its sodas into combo meal offerings, specifically with McDonald’s to enhance the fast food chain’s $5 meal deal that includes a soft drink.
Coca-Cola’s performance surpassed Wall Street expectations, with reported revenues of $12.4 billion during the second quarter, translating to approximately $0.84 per share. Analysts had anticipated revenues of around $11.76 billion or about $0.81 per share. The company has revised its forecast for organic revenue growth, now predicting an increase of 9% to 10%, up from the previous estimate of 8% to 9%.
Similarly, Pepsi has faced challenges in attracting U.S. consumers who are shifting towards healthier products that support weight loss. A recent Gallup poll indicated that young adults in the U.S. are consuming significantly less alcohol than before. In early July, Pepsi attributed its lackluster second-quarter performance to a series of product recalls.