Consumers in the United States are holding back on soda purchases, influenced by the rise of weight loss medications and non-alcoholic alternatives.
Despite this trend, Coca-Cola reported strong second-quarter earnings, fueled by high global demand for its beverages, which has led the company to raise its full-year outlook. CEO James Quincey expressed optimism about the company’s performance, noting solid growth in both revenue and operating income in a challenging market.
However, Coca-Cola experienced a 1% decline in volume sales in North America during the quarter. Quincey attributed this drop to “softness in away-from-home channels,” which encompasses water, sports drinks, coffee, tea, and soda products. The decline was partly balanced by the success of its Fairlife milk product and its flagship soda, which ranked first and second in retail sales growth.
To counteract the decline, Coca-Cola is collaborating with food chains to integrate its soda into combo meals. The company is specifically working with McDonald’s to enhance the fast food chain’s $5 meal deal, which incorporates a soft drink.
In terms of financial performance, Coca-Cola exceeded Wall Street expectations, reporting $12.4 billion in revenue for the second quarter, translating to about $0.84 per share. Analysts had projected revenues of $11.76 billion, or roughly $0.81 per share. The company has now adjusted its forecast for organic revenue growth, predicting an increase of 9% to 10%, up from the previous estimate of 8% to 9%.
Meanwhile, Pepsi is facing similar challenges in attracting U.S. consumers who are increasingly focused on weight loss and healthier choices. In early July, Pepsi cited product recalls as a factor in its disappointing second-quarter performance.