Weight loss medications and non-alcoholic beverages are causing U.S. consumers to hesitate in purchasing sodas.
Despite this trend, Coca-Cola reported strong second-quarter earnings, buoyed by significant global demand for its beverages, leading the company to raise its full-year projections. CEO James Quincey expressed optimism regarding the company’s performance, highlighting solid growth in revenue and operating income in a fluctuating market.
However, Coca-Cola experienced a 1% decline in volume sales in North America during the quarter. Quincey noted that this decline in the U.S. was largely due to reduced activity in away-from-home channels, which encompass its water, sports drinks, coffee, tea, and soda lines. This decrease was somewhat mitigated by sales from its Fairlife milk and its flagship soft drink, Coke, which ranked first and second in retail sales growth, respectively.
To counter the downturn, Coca-Cola is collaborating with food chains to integrate its beverages into combo meal offerings. The company is reportedly partnering with McDonald’s to enhance the fast-food giant’s $5 meal deal that includes a soda.
Overall, Coca-Cola surpassed Wall Street’s expectations, reporting revenue of $12.4 billion for the second quarter, equating to approximately $0.84 per share. Analysts had projected revenue of $11.76 billion, or about $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%.
Meanwhile, Pepsi is also facing challenges in attracting U.S. consumers who are leaning towards healthier choices and weight loss products. Recent data from Gallup indicates that young adults in the U.S. are consuming significantly less alcohol. Earlier in July, Pepsi attributed its lackluster second-quarter performance to a series of product recalls.