Weight loss medications and non-alcoholic beverages are prompting consumers in the United States to reduce their soda purchases.
Despite this trend, Coca-Cola announced strong earnings for the second quarter on Tuesday, fueled by significant global demand for its beverages, leading the company to increase its full-year financial outlook.
CEO James Quincey expressed optimism about the company’s performance, highlighting “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 during the earnings call that this decrease was due to “softness in away-from-home channels,” which encompass categories like water, sports drinks, coffee, tea, and soda.
The downturn was somewhat mitigated by the successful sales of Fairlife milk and the Coca-Cola beverage itself, which ranked first and second in retail sales growth, respectively.
To counteract sales challenges, Quincey indicated that Coca-Cola is collaborating with restaurant chains to integrate its sodas into combo meals. Notably, the company is reportedly partnering with McDonald’s to enhance the fast food chain’s $5 meal deal, which includes a soft drink.
Overall, Coca-Cola exceeded Wall Street estimates, reporting $12.4 billion in revenue for the quarter, amounting to approximately $0.84 per share. Analysts had predicted revenue of $11.76 billion or around $0.81 per share, as per FactSet.
The company has raised its forecast for organic revenue growth to between 9% and 10%, up from its earlier projection of 8% to 9%.
Similarly, Pepsi is facing challenges in engaging U.S. consumers, who are increasingly focusing on weight loss and healthier lifestyle choices. A Gallup poll indicates that young adults in the U.S. are consuming significantly less alcohol than in the past. In early July, Pepsi attributed its subdued second-quarter performance to a series of product recalls.