Weight loss medications and non-alcoholic alternatives are causing a shift in consumer habits, leading many in the U.S. to reduce their soda purchases.
Despite these trends, Coca-Cola reported a strong performance in the second quarter, benefiting from solid global demand for its beverages. This prompted the company to revise its full-year forecast upwards.
Coca-Cola’s CEO, James Quincey, expressed optimism about the second quarter results, highlighting growth in both revenue and operating income amidst a changing market environment.
However, the company experienced a 1% decline in volume sales in North America during the same period. Quincey attributed this dip to softer demand in away-from-home venues, which encompasses various drinks including water, sports drinks, coffee, tea, and sodas.
Despite the overall volume decline, the sales of Coca-Cola’s Fairlife milk and the soda itself helped mitigate losses, with Coke and its other offerings showing notable retail sales growth.
To combat falling sales, Coca-Cola is collaborating with food chains to incorporate its drinks into meal deals. Reports indicate that the beverage company is partnering with McDonald’s to enhance its $5 meal deal, which includes a soda.
Coca-Cola outperformed Wall Street expectations in the second quarter, achieving $12.4 billion in revenue, equating to approximately $0.84 per share. Analysts had predicted a revenue of around $11.76 billion at about $0.81 per share.
The company now anticipates organic revenue growth between 9% and 10%, raising its previous forecast of 8% to 9%.
Similarly, Pepsi is facing challenges in attracting U.S. consumers, who are increasingly opting for healthier options in light of rising weight loss trends. Additionally, Pepsi cited a series of recalls as contributing factors to its lackluster performance in the second quarter.