Weight loss medications and an increasing preference for non-alcoholic beverages have led to a decline in soda purchases among consumers in the United States.
Despite this trend, Coca-Cola reported strong earnings for the second quarter, fueled by high global demand for its products, prompting the company to revise its annual forecasts upwards.
“We are pleased with our second-quarter results, which show significant topline and operating income growth amid a changing market,” stated James Quincey, CEO of Coca-Cola.
However, the company did experience a 1% decline in volume sales in North America during this quarter. Quincey explained that this drop was largely due to reduced sales in “away-from-home channels,” which includes water, sports drinks, coffee, tea, and sodas.
The decline was somewhat balanced by strong performance from Coca-Cola’s Fairlife milk brand and its flagship soda, which ranked first and second in retail sales growth, respectively.
To mitigate the decline, Quincey noted that Coca-Cola is collaborating with fast food chains to incorporate its sodas into combo meals. For instance, the company is reportedly working with McDonald’s to enhance its $5 meal deal, which includes a soft drink.
Coca-Cola exceeded Wall Street’s expectations, reporting $12.4 billion in revenue for the second quarter, which translates to approximately $0.84 per share. Analysts had predicted revenue of $11.76 billion, or around $0.81 per share, according to FactSet.
The company has now updated its forecast for organic revenue growth to between 9% and 10%, an increase from its previous estimate of 8% to 9%.
Similarly, Pepsi has faced challenges in attracting U.S. consumers who are increasingly favoring products that support weight loss and healthier lifestyles. According to a Gallup poll, young adults in the U.S. have significantly reduced their alcohol consumption. In early July, Pepsi attributed its lower performance in the second quarter to a series of product recalls.