Health-focused dietary choices and weight loss medications have led to a decline in soda purchases among American consumers.
Despite this trend, Coca-Cola announced strong earnings for the second quarter, fueled by high global demand for its beverages. As a result, the company has increased its financial outlook for the year.
Coca-Cola’s CEO, James Quincey, expressed optimism about the company’s performance, highlighting steady revenue and operating income growth amid changing market conditions.
However, sales volume in North America fell by 1% in the latest quarter. Quincey attributed this drop to weaker sales in out-of-home channels, which encompass water, sports drinks, coffee, tea, and soft drinks.
The decline was somewhat counterbalanced by positive performance in Coca-Cola’s Fairlife milk line and its flagship soda, Coke, which ranked first and second in retail sales growth, respectively, during the quarter.
To counteract volume losses, Coca-Cola is collaborating with various food chains to include its sodas in meal deals. Notably, the company is working with McDonald’s to enhance the appeal of its $5 meal deals, which come with a soft drink.
Overall, Coca-Cola surpassed market expectations, reporting quarterly revenues of $12.4 billion, translating to approximately $0.84 per share. Analysts had predicted revenues of about $11.76 billion, or around $0.81 per share.
The company has raised its forecast for organic revenue growth to between 9% and 10%, compared to its earlier estimate of 8% to 9%.
Similarly, Pepsi has faced challenges in attracting U.S. consumers, who are increasingly leaning towards weight loss options and healthier lifestyle choices. A Gallup poll indicates that younger adults in the U.S. are drinking significantly less alcohol than in the past. Pepsi recently attributed its lackluster second quarter to a series of product recalls.