Weight loss medications and non-alcoholic beverages are leading to a decline in soda purchases among consumers in the U.S.
Despite this trend, Coca-Cola has reported strong earnings for the second quarter, boosted by robust global demand for its products. This performance has encouraged the beverage company to raise its full-year forecast.
James Quincey, CEO of Coca-Cola, expressed optimism regarding the company’s quarterly results, highlighting solid growth in both revenue and operating income in a changing market.
However, Coca-Cola did experience a 1% decline in volume sales in North America during the quarter. Quincey attributed this decrease to diminished sales in “away-from-home channels,” which include soda, as well as water, sports drinks, coffee, and tea.
The decline was somewhat mitigated by the popularity of Fairlife milk and Coca-Cola’s flagship soda, which ranked first and second respectively in retail sales growth during the quarter.
To counter the fall in sales, Quincey mentioned Coca-Cola’s efforts to collaborate with fast-food chains to incorporate its sodas into combo meals. Reports indicate that the company is working with McDonald’s to enhance their $5 meal deal, which includes a soft drink.
Overall, Coca-Cola exceeded Wall Street expectations for the quarter, reporting $12.4 billion in revenue, or approximately $0.84 per share, while analysts had projected revenue of $11.76 billion, or around $0.81 per share.
The company has also raised its forecast for organic revenue growth to a range of 9% to 10%, an increase from its prior estimate of 8% to 9%.
Pepsi, on the other hand, is facing challenges in capturing consumer interest in the U.S., as more people are opting for products geared towards weight loss and healthier habits. Recent polling indicates a notable decline in alcohol consumption among young adults in the U.S. Additionally, Pepsi attributed its lackluster second quarter performance to a series of product recalls.