Weight loss medications and non-alcoholic alternatives have led to a slowdown in soda purchases, particularly in the U.S.
Despite this trend, Coca-Cola reported strong second-quarter earnings on Tuesday, fueled by robust global demand for its products, which prompted the company to enhance its full-year outlook.
“We are encouraged with our second-quarter results, which delivered solid top-line and operating income growth in an ever-changing landscape,” stated James Quincey, CEO of Coca-Cola.
However, in North America, the volume of sales dipped by 1% during the quarter. Quincey noted during the earnings call that this decline in the U.S. division stemmed from a decrease in “softness in away-from-home channels,” affecting its water, sports drinks, coffee, tea, and soda offerings.
The decrease was partially countered by growth in its Fairlife milk brand, alongside Coca-Cola itself, which ranked first and second in retail sales growth for the quarter.
To address the decline, Quincey mentioned that Coca-Cola is collaborating with food chains to include its sodas in combo meals. Reports indicate that the company is working with McDonald’s to enhance the fast food chain’s $5 meal deal, which includes a soft drink.
Overall, Coca-Cola surpassed Wall Street’s expectations. The company reported $12.4 billion in revenue for the second quarter, equating to about $0.84 per share, while analysts had anticipated revenue of $11.76 billion, or approximately $0.81 per share, according to FactSet.
Coca-Cola has now revised its forecast for organic revenue growth to between 9% and 10%, raising its previous estimate of 8% to 9%.
Similar to Coca-Cola, Pepsi is facing challenges in engaging U.S. consumers, who are increasingly gravitating toward products that emphasize weight loss and healthier lifestyles. According to a Gallup poll, young adults in the U.S. are also consuming significantly less alcohol than before. In early July, Pepsi attributed its lackluster second-quarter performance to several product recalls.