Weight loss medications and the rise in non-alcoholic beverages are prompting U.S. consumers to reduce their soda purchases.
Despite this trend, Coca-Cola reported strong earnings for the second quarter, bolstered by high global demand for its products. As a result, the company has increased its full-year outlook.
Coca-Cola CEO James Quincey expressed optimism about the company’s performance, highlighting solid revenue and operating income growth in a shifting market.
However, the company experienced a 1% decrease in volume sales in North America during the quarter. Quincey attributed the decline in the U.S. market to “softness in away-from-home channels,” which encompasses its water, sports drinks, coffee, tea, and soda offerings.
This drop was somewhat mitigated by increases in sales of Fairlife milk and Coca-Cola soda, which ranked first and second in retail sales growth, respectively.
To address the sales decline, Quincey mentioned that Coca-Cola is collaborating with food chains to include its sodas in combo meals. Notably, they are working with McDonald’s to enhance the fast food chain’s $5 meal deal that includes a soft drink.
Coca-Cola’s quarterly results exceeded Wall Street’s expectations. The company reported revenues of $12.4 billion, translating to approximately $0.84 per share, surpassing the anticipated $11.76 billion and $0.81 per share forecast, according to FactSet.
Furthermore, Coca-Cola has 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 maintaining consumer interest in the U.S., where a growing number of individuals are gravitating towards products that promote weight loss and healthier lifestyles. According to a Gallup poll, younger adults in the U.S. are consuming significantly less alcohol than before. Earlier in July, Pepsi attributed its weaker second-quarter performance to a series of product recalls.