The growing popularity of weight loss medications and non-alcoholic beverages has led American consumers to hold back on purchasing sodas.
Despite this trend, Coca-Cola reported strong earnings for the second quarter, fueled by high global demand for its products, which prompted the company to raise its full-year forecast.
Coca-Cola CEO James Quincey expressed optimism about the company’s second-quarter performance, highlighting solid growth in both top-line revenue and operating income amidst a shifting market.
Nonetheless, the company’s North American volume sales fell by 1% during the quarter. Quincey noted that the decline in the U.S. division was primarily due to “softness in away-from-home channels,” affecting water, sports drinks, coffee, tea, and sodas.
The decrease in volume was somewhat mitigated by the popularity of Fairlife milk and Coca-Cola, which led retail sales growth in the quarter.
To counterbalance these challenges, Quincey mentioned that Coca-Cola is collaborating with food chains to incorporate its sodas into combo meals. The company is reportedly working with McDonald’s to enhance its $5 meal deal, which includes a soft drink.
Overall, Coca-Cola exceeded Wall Street expectations, reporting revenues of $12.4 billion, or approximately $0.84 per share, surpassing forecasts of $11.76 billion and $0.81 per share.
The company also raised its outlook for organic revenue growth, now expecting an increase of 9% to 10%, up from the previous estimate of 8% to 9%.
Pepsi, like Coca-Cola, is facing challenges in attracting U.S. consumers who are increasingly opting for products that support weight loss and healthier lifestyles. A recent Gallup poll revealed that young adults are consuming significantly less alcohol than in the past. Additionally, Pepsi reported a lackluster second quarter, attributing its performance to a series of product recalls.