Consumers in the U.S. are increasingly opting for weight loss medications and non-alcoholic alternatives, which is impacting soda sales.
Despite these trends, Coca-Cola announced strong earnings for the second quarter on Tuesday, largely due to robust worldwide demand for its beverage products, leading the company to raise its full-year revenue projections.
CEO James Quincey expressed satisfaction with the company’s performance, noting solid growth in both revenue and operating income amid changing market conditions.
In North America, however, Coca-Cola experienced a 1% decline in volume sales during the quarter. Quincey attributed this decrease to softness in away-from-home sales channels, which include water, sports drinks, coffee, tea, and soda. The decline was somewhat countered by growth in its Fairlife milk brand and strong sales in its flagship Coca-Cola product, which ranked high in retail sales growth for the quarter.
To combat the downturn, Coca-Cola is partnering with restaurant chains to incorporate its beverages into combo meal offerings. Notably, the company is collaborating with McDonald’s to enhance the fast-food chain’s $5 meal deal, which includes a soft drink.
Overall, Coca-Cola surpassed market expectations for the quarter, reporting revenues of $12.4 billion, or about $0.84 per share, exceeding the anticipated revenue of $11.76 billion, or roughly $0.81 per share.
The company has revised its outlook for organic revenue growth, now predicting a range of 9% to 10%, up from the previous estimate of 8% to 9%.
PepsiCo is facing similar challenges as it struggles to engage U.S. consumers, who are increasingly favoring products that promote weight loss and healthier lifestyles. A Gallup poll indicates that young adults in the U.S. are consuming less alcohol than they used to. In early July, Pepsi attributed its lackluster second-quarter performance to a series of product recalls.