Weight loss medications and non-alcoholic alternatives have led U.S. consumers to reduce soda purchases.
Despite this trend, Coca-Cola reported strong second-quarter earnings, buoyed by robust global demand for its beverages, which has led the company to raise its full-year forecast.
“We are encouraged by our second-quarter results, which showed solid revenue and operating income growth amid a changing market,” said Coca-Cola CEO James Quincey.
However, in North America, the company experienced a 1% drop in volume sales during the quarter. Quincey attributed the decline in the U.S. to “softness in away-from-home channels,” affecting its water, sports drinks, coffee, tea, and soda products.
This decline was partially offset by the success of its Fairlife milk brand and its flagship soda, Coke, which ranked first and second in retail sales growth for the quarter.
To address the sales drop, Coca-Cola is partnering with food chains to include its sodas in combo meal deals. Reports indicate that the company is collaborating with McDonald’s to enhance its $5 meal deal, which includes a soft drink.
Overall, Coca-Cola surpassed Wall Street expectations, reporting $12.4 billion in revenue for the second quarter, or about $0.84 per share. Analysts had predicted revenues of around $11.76 billion and earnings of approximately $0.81 per share, according to FactSet.
The company has now revised its forecast for organic revenue growth to between 9% and 10%, up from the previous estimate of 8% to 9%.
Pepsi is facing similar challenges, as U.S. consumers shift their focus towards weight loss and healthier products. A Gallup poll indicates that young adults in the U.S. are consuming significantly less alcohol than before. Earlier this month, Pepsi attributed its lackluster second-quarter performance to a series of product recalls.