Weight loss medications and non-alcoholic beverages have led to a decline in soda purchases among consumers in the U.S.
Despite this trend, Coca-Cola reported strong earnings for the second quarter, bolstered by high global demand for its soft drink products. The company has adjusted its full-year outlook upwards as a result of its performance.
“We are encouraged with our second-quarter results, which delivered solid topline and operating income growth in an ever-changing landscape,” stated Coca-Cola CEO James Quincey.
However, Coca-Cola did experience a 1% decrease in volume sales in North America during the quarter. Quincey noted that the drop in U.S. sales was attributed to “softness in away-from-home channels,” impacting its range of products, including water, sports drinks, coffee, tea, and soda.
This decline was somewhat mitigated by the success of its Fairlife milk product and the popularity of Coke, which ranked first and second in retail sales growth in the quarter.
To counter the volume drop, Coca-Cola is collaborating with food chains to integrate its drinks into combo meals. Reports suggest the company is partnering with McDonald’s to enhance the latter’s $5 meal deal, which features a soft drink.
Despite the challenges, Coca-Cola exceeded Wall Street estimates, reporting $12.4 billion in revenue for the second quarter, equating to approximately $0.84 per share, compared to the expected $11.76 billion and $0.81 per share projections.
The company has also raised its forecast for organic revenue growth to between 9% and 10%, surpassing the previous estimate of 8% to 9%.
Similarly, Pepsi has faced difficulties in appealing to U.S. consumers, who are increasingly drawn to products geared towards 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 to a series of product recalls.