Weight loss drugs and non-alcoholic alternatives are contributing to a lack of soda purchases among U.S. consumers.
Despite these trends, Coca-Cola announced strong earnings for the second quarter, fueled by high global demand for its beverage line, prompting the company to increase its full-year outlook.
Coca-Cola CEO James Quincey expressed optimism about the company’s second-quarter results, highlighting solid growth in revenue and operating income amidst a fluctuating market.
However, the North American division experienced a 1% decline in volume sales during the quarter. Quincey noted that this decrease was influenced by decreased demand in away-from-home channels, which encompass water, sports drinks, coffee, tea, and soda.
The drop in volume was somewhat mitigated by growth in the Fairlife milk brand and Coca-Cola itself, which ranked high in retail sales growth during the quarter.
To combat the decline, Coca-Cola is collaborating with food chains to integrate its sodas into combo meal offerings. Reports indicate that the company is partnering with McDonald’s to enhance the appeal of the fast food giant’s $5 meal deal, which includes a soft drink.
Overall, Coca-Cola surpassed analysts’ expectations, reporting $12.4 billion in revenue for the second quarter, which translates to approximately $0.84 per share. Analysts had anticipated revenue of $11.76 billion, or about $0.81 per share.
The company also revised its forecast for organic revenue growth, now projecting an increase of 9% to 10%, up from an earlier estimate of 8% to 9%.
Meanwhile, Pepsi has faced challenges in attracting U.S. consumers who are increasingly opting for healthier options and weight loss 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.