Weight loss medications and non-alcoholic beverage alternatives have led to a slowdown in soda purchases among U.S. consumers.
Despite this trend, Coca-Cola reported impressive second-quarter earnings, bolstered by strong global demand for its products. This prompted the company to raise its forecasts for the full year.
Coca-Cola’s CEO, James Quincey, expressed optimism about the company’s performance, noting solid revenue and operating income growth amid a shifting market landscape.
However, volume sales in North America fell by 1% during the quarter. Quincey attributed this decline to “softness in away-from-home channels,” which encompasses its water, sports drinks, coffee, tea, and soda options. The downturn was somewhat mitigated by the success of Fairlife milk and Coca-Cola’s namesake soda, which ranked first and second in retail sales growth, respectively.
To counteract the volume drop, Quincey mentioned that Coca-Cola is collaborating with food chains to include its sodas in combo meals. The company is reportedly partnering with McDonald’s to enhance the fast-food chain’s $5 meal deal, which features a soft drink.
Coca-Cola surpassed Wall Street expectations in its financial performance, reporting $12.4 billion in revenue during the second quarter, translating to approximately $0.84 per share. Analysts had anticipated revenue of $11.76 billion, roughly $0.81 per share.
The company has increased its forecast for organic revenue growth to between 9% and 10%, updating its previous estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in attracting U.S. consumers, who are leaning towards products that support weight loss and healthier lifestyles. A Gallup poll indicated that young adults in the U.S. are consuming significantly less alcohol than in the past. Earlier in July, Pepsi attributed its lackluster second-quarter results to a series of product recalls.