Consumers in the U.S. are delaying soda purchases, influenced by the popularity of weight loss medications and non-alcoholic beverage options.
Despite this trend, Coca-Cola reported strong earnings for the second quarter, fueled by robust global demand for its beverages, leading the company to raise its full-year guidance.
CEO James Quincey expressed optimism about the company’s performance, highlighting notable growth in revenue and operating income amidst a fluctuating market.
However, Coca-Cola’s North American volume sales experienced a decline of 1% during the quarter. Quincey attributed this downturn to “softness in away-from-home channels,” which includes various products such as water, sports drinks, coffee, tea, and soda.
This decline was partly mitigated by the success of Fairlife milk and the strong performance of Coke, which ranked first and second in retail sales growth for the quarter.
To counteract the decline, Coca-Cola is collaborating with restaurant chains to integrate its soda into combo meals. Reports indicate that the company is working with McDonald’s to enhance its $5 meal deal, which includes a soft drink.
Coca-Cola’s revenue for the second quarter reached $12.4 billion, translating to approximately $0.84 per share, surpassing market expectations of $11.76 billion and $0.81 per share, based on FactSet data.
The company revised its forecast for organic revenue growth to a range of 9% to 10%, an increase from its earlier prediction of 8% to 9%.
Similarly, Pepsi is facing challenges in appealing to U.S. consumers who are increasingly inclined toward health-conscious choices and weight loss products. A Gallup poll indicated that young adults in the U.S. are consuming significantly less alcohol than in the past. In early July, Pepsi cited a number of product recalls as a factor contributing to its lackluster performance in the second quarter.