Consumers in the U.S. are increasingly hesitant to purchase sodas, influenced by the rising popularity of weight loss medications and non-alcoholic beverage options.
Despite these challenges, Coca-Cola reported impressive earnings for the second quarter, thanks to robust global demand for its products, leading the company to revise its full-year forecasts upwards. CEO James Quincey expressed optimism about the results, citing the company’s ability to achieve solid growth in both revenue and operating income amid a shifting market.
In North America, however, Coca-Cola experienced a 1% decline in volume sales during the quarter. Quincey pointed out that this decline in the U.S. was largely due to weaker performance in channels outside the home, which encompasses water, sports drinks, coffee, tea, and soda. This downturn was somewhat offset by stronger sales from Fairlife milk and Coca-Cola’s flagship soda, which ranked highly in retail sales growth for the period.
To combat the downturn, Coca-Cola is collaborating with food chains to incorporate its sodas into combo meals, and it is reportedly working with McDonald’s to enhance the appeal of the fast-food chain’s $5 meal deal that includes a soft drink.
Overall, Coca-Cola surpassed analysts’ expectations, recording $12.4 billion in revenue and earnings of approximately $0.84 per share, exceeding the forecast of $11.76 billion in revenue and $0.81 per share.
The company has now increased its forecast for organic revenue growth to between 9% and 10%, up from an earlier estimate of 8% to 9%.
Similarly, Pepsi is facing difficulties in capturing the attention of U.S. consumers, who are increasingly leaning toward healthier options and weight loss-focused products. A Gallup poll notes that young adults are drinking significantly less alcohol than before. In July, Pepsi attributed its underwhelming second quarter results to a series of product recalls.