Weight loss medications and non-alcoholic beverages are causing U.S. consumers to hesitate in purchasing sodas. Despite these trends, Coca-Cola reported strong earnings for the second quarter, benefiting from solid global demand for its products, leading the company to raise its full-year forecasts.
James Quincey, the CEO of Coca-Cola, expressed optimism about the company’s performance, highlighting notable growth in revenue and operating income despite a challenging market. Nevertheless, North American sales volume saw a slight decline of 1% during the quarter. Quincey attributed this downturn in the U.S. market to a decrease in “away-from-home channels,” which encompasses categories such as water, sports drinks, coffee, tea, and traditional sodas.
Coca-Cola noted that this dip was somewhat mitigated by its Fairlife milk brand and its flagship soda, Coke, which ranked first and second in retail sales growth, respectively, for the quarter.
To combat the decline, Quincey mentioned that Coca-Cola is collaborating with food chains to incorporate its sodas into combo meals. The company is reportedly partnering with McDonald’s to enhance the appeal of its $5 meal deal that includes a soft drink.
Overall, Coca-Cola exceeded Wall Street’s expectations, reporting revenue of $12.4 billion for the second quarter, or approximately $0.84 per share. Analysts had anticipated revenue around $11.76 billion, or about $0.81 per share.
The beverage giant also revised its organic revenue growth forecast, now estimating an increase of 9% to 10%, compared to the previous estimate of 8% to 9%.
Pepsi, like Coca-Cola, is facing challenges in attracting U.S. consumers, who are increasingly gravitating towards weight-loss products and healthier options. According to a Gallup poll, young adults in the U.S. are drinking significantly less alcohol than before. Earlier in July, Pepsi attributed its subdued second-quarter performance to a series of product recalls.