In the United States, weight loss medications and non-alcoholic beverage options are causing consumers to reduce their soda purchases.
Despite this trend, Coca-Cola reported strong second-quarter earnings, fueled by robust global demand for its products, leading the company to increase its full-year forecast.
Coca-Cola CEO James Quincey stated, “We are encouraged with our second-quarter results, which delivered solid topline and operating income growth in an ever-changing landscape.”
However, in North America, Coca-Cola experienced a 1% decline in volume sales during the quarter. Quincey explained that the drop in its U.S. division was due to “softness in away-from-home channels,” which includes water, sports drinks, coffees, teas, and sodas.
This decline was somewhat mitigated by the company’s Fairlife milk line and its flagship soda, Coke, which ranked first and second in retail sales growth respectively during the quarter.
To counteract the volume decrease, Coca-Cola is collaborating with food chains to include their sodas in combo meal offerings. Reports suggest they are working with McDonald’s on enhancing the fast-food chain’s $5 meal deal, which features a soft drink.
Overall, Coca-Cola exceeded Wall Street expectations, reporting $12.4 billion in revenue for the second quarter, which translates to approximately $0.84 per share. Analysts had predicted revenues of $11.76 billion, or around $0.81 per share, according to FactSet.
The company has now raised its forecast for organic revenue growth to between 9% and 10%, up from its earlier prediction of 8% to 9%.
Similarly, Pepsi is finding it difficult to attract U.S. consumers, who are increasingly leaning towards products focused on weight loss and healthier lifestyles. A Gallup poll indicates that young adults in the U.S. are consuming significantly less alcohol than before. In early July, Pepsi attributed its lackluster second-quarter results to a series of product recalls.