Consumers in the U.S. are reassessing their soda purchases, influenced by weight loss medications and the availability of non-alcoholic alternatives.
Despite this trend, Coca-Cola reported strong second-quarter earnings on Tuesday, benefiting from robust global demand for its beverage offerings, prompting the company to revise its full-year outlook upward.
Coca-Cola CEO James Quincey expressed optimism about the company’s performance, highlighting solid revenue and operating income growth in a shifting market.
However, in North America, the company experienced a 1% decline in volume sales during the quarter. Quincey attributed this decrease to a slowdown in “away-from-home channels,” which encompass products such as water, sports drinks, coffee, tea, and soda.
The decline was somewhat mitigated by sales of Fairlife milk and the flagship Coca-Cola beverage, which ranked first and second in retail sales growth for the period.
To combat the drop in sales, Quincey stated that Coca-Cola is collaborating with food chains to integrate its sodas into combo meals. The company is reportedly working with McDonald’s to enhance the fast food chain’s $5 meal deal that includes a soft drink.
In total, Coca-Cola surpassed Wall Street forecasts for the quarter, reporting $12.4 billion in revenue, equating to about $0.84 per share. Analysts had predicted revenue of $11.76 billion, or roughly $0.81 per share.
The company has now increased its forecast for organic revenue growth to between 9% and 10%, up from its previous estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in capturing the interest of U.S. consumers, who are gravitating towards products focused on weight loss and healthier lifestyles. According to a Gallup poll, young adults in the U.S. are consuming significantly less alcohol than in the past. In early July, Pepsi attributed its lackluster second quarter to a series of product recalls.