Weight loss medications and non-alcoholic alternatives are causing consumers in the U.S. to hesitate in their soda purchases.
Despite this trend, Coca-Cola announced strong earnings for the second quarter on Tuesday, influenced by significant global demand for its beverage products, which led the company to increase its full-year projections.
CEO James Quincey expressed satisfaction with the company’s second-quarter outcomes, noting substantial growth in both revenue and operating income amid changing market conditions.
However, North America saw a 1% decline in volume sales during the quarter. Quincey explained that this downturn in the U.S. was primarily due to weaker performance in away-from-home channels, which encompass a variety of beverages including water, sports drinks, coffee, tea, and sodas.
This decline was somewhat mitigated by the success of Fairlife milk and Coca-Cola, which ranked first and second in retail sales growth, respectively, during the quarter.
To counterbalance the drop, Quincey indicated that Coca-Cola is collaborating with food chains to incorporate its soda into combo meals, specifically mentioning a partnership with McDonald’s to enhance its $5 meal deal that includes a soft drink.
Overall, Coca-Cola surpassed Wall Street expectations, reporting $12.4 billion in revenue for the second quarter, roughly $0.84 per share. Analysts had projected that Coca-Cola would achieve revenues of $11.76 billion, or about $0.81 per share.
The company has now revised its forecast for organic revenue growth to between 9% and 10%, an increase from the previous estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in attracting U.S. consumers, who are increasingly gravitating towards products that emphasize weight loss and healthier lifestyles. Young adults are reportedly drinking significantly less alcohol than before, according to a Gallup poll. In early July, Pepsi attributed its disappointing second-quarter results to several product recalls.