Weight loss medications and non-alcoholic beverages are causing U.S. consumers to hesitate in purchasing sodas.
Despite this trend, Coca-Cola reported strong earnings for the second quarter, fueled by high global demand for its beverages, leading the company to revise its full-year forecast upward.
James Quincey, CEO of Coca-Cola, expressed optimism about the company’s second-quarter performance, highlighting solid growth in both revenue and operating income in a dynamic market.
Nevertheless, the company did experience a 1% decline in volume sales within North America during the quarter. Quincey explained that this decrease was primarily due to weaker performance in “away-from-home” channels, affecting soda, water, sports drinks, coffee, and tea.
This decline was partially balanced by robust sales of Fairlife milk and strong performance from Coca-Cola itself, which ranked first and second in retail sales growth.
To counteract the sales dip, Quincey mentioned that Coca-Cola is collaborating with restaurant chains to include its sodas in combo meals. The company is reportedly working alongside McDonald’s to enhance the fast-food chain’s $5 meal deal that features a soft drink.
Despite the volume drop, Coca-Cola surpassed Wall Street expectations, reporting $12.4 billion in revenue for the second quarter, equating to approximately $0.84 per share. Analysts had predicted revenues of around $11.76 billion, or approximately $0.81 per share.
The company has adjusted its forecast for organic revenue growth to between 9% and 10%, an increase from its previous estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in attracting U.S. consumers, who are increasingly inclined towards products that support weight loss and healthier lifestyles. Recent data reveals that young adults in the U.S. are drinking significantly less alcohol than in the past. Earlier in July, Pepsi attributed its lackluster second quarter to a series of product recalls.