Weight loss medications and a rise in non-alcoholic beverage options are leading consumers in the U.S. to reduce their soda purchases.
Despite these trends, Coca-Cola reported strong earnings for the second quarter, driven by global demand for its products, leading the company to revise its full-year projections upwards. CEO James Quincey expressed optimism about the company’s performance, noting significant growth in both revenue and operating income in a fluctuating market.
However, Coca-Cola experienced a 1% decline in volume sales in North America. Quincey attributed this drop to challenges in the “away-from-home channels,” which encompass water, sports drinks, coffee, tea, and soda products. The decline was somewhat mitigated by the success of Fairlife milk and Coca-Cola’s own soda offerings, which ranked first and second in retail sales growth for the quarter.
To tackle the sales decline, Coca-Cola is collaborating with fast food chains to include its sodas in combo meals. The company is working specifically with McDonald’s to enhance its $5 meal deal that features a soft drink.
Overall, Coca-Cola outperformed Wall Street expectations, reporting $12.4 billion in revenue for the second quarter, translating to roughly $0.84 per share, surpassing the anticipated $11.76 billion and $0.81 per share.
The company has adjusted its forecast for organic revenue growth, projecting an increase between 9% and 10%, an uptick from its previous estimate of 8% to 9%.
Pepsi is also facing challenges in appealing to U.S. consumers, who are increasingly leaning towards products that support weight loss and healthier lifestyles. A recent Gallup poll indicates that young adults in the U.S. are consuming significantly less alcohol than before. In July, Pepsi attributed its disappointing second-quarter performance to a series of product recalls.