Weight loss medications and non-alcoholic alternatives are leading consumers in the U.S. to reduce their soda purchases.
Despite this trend, Coca-Cola reported strong earnings for the second quarter, benefiting from solid global demand for its products, which enabled the company to increase its full-year guidance. CEO James Quincey expressed optimism about the quarter’s results, noting significant growth in revenue and operating income amid a changing market landscape.
However, Coca-Cola did experience a 1% decline in volume sales in North America. Quincey attributed this drop to weakened demand in “away-from-home channels,” which encompass the company’s water, sports drinks, coffee, tea, and sodas. The decrease was somewhat mitigated by the performance of Fairlife milk and Coke, which ranked first and second in retail sales growth for the quarter.
To combat the decline in sales, Coca-Cola is collaborating with food chains to integrate its sodas into combo meals. Reports suggest the company is partnering with McDonald’s to enhance its $5 meal deal, which includes a soft drink.
Overall, Coca-Cola surpassed analysts’ expectations, reporting $12.4 billion in revenue for the second quarter, equating to around $0.84 per share. Wall Street had anticipated revenue of approximately $11.76 billion, or roughly $0.81 per share.
The company has now adjusted its forecast for organic revenue growth to between 9% and 10%, an increase from its earlier prediction of 8% to 9%.
Similarly, Pepsi is finding it challenging to attract U.S. consumers, who are increasingly opting for products that promote weight loss and healthier lifestyles. A Gallup poll indicates that young adults in the U.S. are consuming less alcohol than in past years. In early July, Pepsi attributed its lackluster second quarter performance to a series of product recalls.