Weight loss medications and a rise in non-alcoholic beverage options have led many consumers in the U.S. to cut back on soda purchases.
Despite this trend, Coca-Cola reported strong earnings for the second quarter, fueled by high global demand for its products. The beverage company has raised its forecast for the year. “We are encouraged with our second-quarter results, which delivered solid topline and operating income growth in an ever-changing landscape,” said CEO James Quincey in a statement.
In North America, however, Coca-Cola experienced a 1% decline in volume sales this quarter. Quincey attributed this drop to a decrease in “away-from-home channels,” which encompass its water, sports, coffee and tea, and soda products.
The decline was somewhat cushioned by the success of Fairlife milk and Coca-Cola itself, which ranked first and second in retail sales growth during the quarter, respectively. To counteract the downturn, Coca-Cola is collaborating with food chains to integrate its soda into combo meals. Reports indicate the company is partnering with McDonald’s to enhance a $5 meal deal that includes a soft drink.
Coca-Cola surpassed Wall Street projections for the quarter, posting $12.4 billion in revenue, or approximately $0.84 per share. Analysts had anticipated revenue to be around $11.76 billion, or about $0.81 per share.
Furthermore, the company has adjusted its forecast for organic revenue growth to between 9% and 10%, an increase from the previous estimate of 8% to 9%.
Pepsi, akin to Coca-Cola, is facing challenges in appealing to U.S. consumers who are leaning more towards products that support weight loss and healthier lifestyles. A Gallup poll has shown that younger Americans are consuming significantly less alcohol than before. In early July, Pepsi cited a series of product recalls as a factor in its disappointing second quarter results.