Weight loss medications and non-alcoholic alternatives are causing U.S. consumers to reduce their soda purchases.
Despite this trend, Coca-Cola reported strong earnings for the second quarter, attributing success to high global demand for its beverage selections. This performance has led the company to raise its full-year financial projections.
Coca-Cola CEO James Quincey expressed optimism about the company’s second-quarter results, noting significant growth in both revenue and operating income amid changing market conditions.
However, in North America, volume sales fell by 1% over the quarter. Quincey explained that the decline in the U.S. market stemmed from weaker sales in “away-from-home” channels, which include water, sports drinks, coffee and tea, as well as traditional sodas.
This downturn was slightly mitigated by the popularity of Fairlife milk and the company’s flagship product, Coke, which secured top positions in retail sales growth.
To address the sales decline, Quincey mentioned Coca-Cola’s collaboration with restaurant chains to include its beverages in combo meals. Reports suggest that the company is working alongside McDonald’s to enhance the fast food chain’s $5 meal deal, which features a soft drink.
In general, Coca-Cola surpassed Wall Street predictions, reporting $12.4 billion in revenue for the second quarter, equating to approximately $0.84 per share. Analysts had anticipated revenues of about $11.76 billion, or roughly $0.81 per share.
The company has now revised its outlook for organic revenue growth to a range of 9% to 10%, up from an earlier estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in capturing the interest of U.S. consumers, who are gravitating toward healthier products focused on weight management. Recent reports indicate that young adults in the U.S. are consuming significantly less alcohol, as per findings from a Gallup poll. Additionally, Pepsi attributed its lackluster second quarter to a series of product recalls.