Weight loss medications and an increase in non-alcoholic beverage options are leading many consumers in the U.S. to reduce their soda purchases.
Despite this trend, Coca-Cola reported strong second-quarter earnings on Tuesday, attributed mainly to a solid global demand for its products, prompting the company to revise its full-year revenue forecasts upward.
“We are encouraged with our second-quarter results, which delivered solid topline and operating income growth in an ever-changing landscape,” stated James Quincey, CEO of Coca-Cola.
However, in North America, the company noted a 1% decline in volume sales during the quarter. Quincey explained that this decrease was primarily due to weaker performance in away-from-home channels, which encompasses water, sports drinks, coffee, tea, and soda.
This decline was somewhat balanced by increases in sales for Fairlife milk and Coca-Cola, which ranked first and second in retail sales growth for the quarter. To counteract the drop in soda sales, Quincey mentioned that Coca-Cola is collaborating with restaurant chains to include their products in combo meals, with McDonald’s being one partner in enhancing its $5 meal deal, which features a soft drink.
Coca-Cola’s performance exceeded Wall Street estimates, reporting $12.4 billion in revenue for the second quarter, or approximately $0.84 per share. Analysts had predicted $11.76 billion in revenue, which equates to roughly $0.81 per share.
The company has adjusted its forecast for organic revenue growth to between 9% and 10%, increasing it from an earlier estimate of 8% to 9%.
Similarly, Pepsi has faced challenges in appealing to health-conscious U.S. consumers. The company has noted a growing preference for products centered on weight loss and healthier lifestyle choices. In early July, Pepsi cited a series of product recalls as a factor contributing to its disappointing second-quarter performance.