Weight loss medications and the rise of non-alcoholic beverages have led to a decline in soda purchases among U.S. consumers.
Despite this trend, Coca-Cola reported strong earnings for the second quarter, bolstered by robust global demand for its products, prompting an increase in its full-year forecasts.
Coca-Cola’s CEO, James Quincey, expressed optimism about the company’s performance, noting solid growth in both revenue and operating income amid a changing market landscape.
However, in North America, the company experienced a 1% decrease in volume sales during the quarter. Quincey attributed this drop to “softness in away-from-home channels,” which includes its water, sports, coffee, tea, and soda categories.
The decline in soda sales was somewhat counterbalanced by the success of its Fairlife milk and the strong performance of Coke, which ranked first and second in retail sales growth for the quarter.
To address the volume drop, Coca-Cola is collaborating with restaurant chains to include its sodas in combo meals. Recently, the beverage giant has worked with McDonald’s to enhance its $5 meal deal that includes a soft drink.
Overall, Coca-Cola exceeded analysts’ expectations during the second quarter, reporting revenues of $12.4 billion, or approximately $0.84 per share, compared to Wall Street’s forecast of $11.76 billion, or about $0.81 per share.
The company has now revised its organic revenue growth outlook to between 9% and 10%, an increase from the previously estimated 8% to 9%.
Similarly, Pepsi has faced challenges in attracting U.S. consumers, who are leaning more towards weight loss-focused and healthier options. A Gallup poll also reveals that young adults in the U.S. are consuming significantly less alcohol than before. In early July, Pepsi attributed its lackluster second-quarter performance to a series of product recalls.