Weight loss medications and non-alcoholic beverages are causing U.S. consumers to reduce their soda purchases.
Despite this trend, Coca-Cola reported strong earnings for the second quarter, boosted by global demand for its beverages, leading the company to increase its full-year forecast.
Coca-Cola’s CEO, James Quincey, expressed optimism regarding the company’s performance, highlighting substantial growth in revenue and operating income amidst a changing market.
However, the company did experience a 1% drop in volume sales in North America. Quincey attributed the decrease primarily to lower sales in away-from-home channels, which encompass products like water, sports drinks, coffee, tea, and soda.
The decline was somewhat mitigated by the success of Fairlife milk and Coca-Cola soda, which ranked first and second respectively in retail sales growth this quarter. To counteract the downturn, Coca-Cola is collaborating with food chains to include its beverages in combo meal offerings, notably partnering with McDonald’s to enhance the $5 meal deal that includes a soft drink.
Overall, Coca-Cola exceeded analysts’ expectations by generating $12.4 billion in revenue during the second quarter, equating to approximately $0.84 per share, surpassing predictions of $11.76 billion and $0.81 per share. The company now projects organic revenue growth of 9% to 10%, an increase from its earlier estimate of 8% to 9%.
Meanwhile, Pepsi is also facing challenges in attracting U.S. consumers, who are increasingly favoring products focused on health and weight loss. The company recently attributed its lackluster second quarter results to a series of product recalls.