Weight loss medications and non-alcoholic alternatives are causing American consumers to hesitate before purchasing sodas.
Despite this trend, Coca-Cola reported strong second-quarter earnings on Tuesday, bolstered by robust global demand for its beverages. This success has prompted the company to raise its full-year guidance.
Coca-Cola’s CEO, James Quincey, expressed optimism about the company’s performance, stating, “We are encouraged with our second-quarter results, which delivered solid top-line and operating income growth in an ever-changing landscape.”
However, North American volume sales dipped by 1% during the quarter. Quincey attributed this decline to “softness in away-from-home channels,” which include products such as water, sports drinks, coffee, tea, and soda.
Notably, the decrease was partly countered by sales from its Fairlife milk brand and its flagship cola, Coke, which ranked first and second in retail sales growth for the quarter.
To address the decline in volume, Coca-Cola is collaborating with food chains to integrate its sodas into combo meals. Reports indicate that the company is working with McDonald’s to improve the fast-food chain’s $5 meal deal, which features a soft drink.
Overall, Coca-Cola exceeded Wall Street expectations, posting $12.4 billion in revenue for the second quarter, translating to approximately $0.84 per share. Analysts had anticipated revenue of $11.76 billion, or roughly $0.81 per share, according to FactSet.
As a result, Coca-Cola has adjusted its forecast for organic revenue growth to between 9% and 10%, an increase from its prior estimate of 8% to 9%.
Like Coca-Cola, Pepsi is also facing challenges in attracting U.S. consumers, who are increasingly gravitating towards products that emphasize weight loss and healthier lifestyles. This trend is evident in a Gallup poll indicating a decline in alcohol consumption among young adults in the U.S. Earlier in July, Pepsi attributed its lackluster second-quarter performance to a series of product recalls.