Weight loss medications and non-alcoholic alternatives are causing consumers to be less inclined to purchase sodas, particularly in the U.S.
Despite this trend, Coca-Cola showcased strong financial performance in its second quarter, buoyed by solid global demand for its beverages, which led the company to adjust its full-year projections upward.
Coca-Cola CEO James Quincey expressed optimism about the earnings report, highlighting significant growth in both revenue and operating income amid a fluctuating market.
However, the company’s North American sales volume decreased by 1% during the quarter. Quincey attributed this decline to “softness in away-from-home channels,” which include products like water, sports drinks, coffee, tea, and sodas.
Coca-Cola noted that the downturn was somewhat mitigated by successful sales of its Fairlife milk and Coca-Cola beverage, which ranked first and second in retail sales growth for the quarter.
To address the volume drop, Quincey mentioned that Coca-Cola is collaborating with food chains to include its sodas in combo meal offerings. Reports indicated that the company is partnering with McDonald’s to enhance the fast-food chain’s $5 meal deal that features a soft drink.
Overall, Coca-Cola surpassed Wall Street’s expectations, reporting $12.4 billion in revenue for the second quarter, translating to earnings of approximately $0.84 per share. Analysts had predicted revenues of about $11.76 billion, or around $0.81 per share.
The company has revised its forecast for organic revenue growth to a range of 9% to 10%, up from an earlier estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in attracting U.S. consumers, who are increasingly favoring products that focus on weight loss and healthier lifestyles. A Gallup poll indicates that young adults in the U.S. are consuming significantly less alcohol than before. In early July, Pepsi attributed its lackluster second quarter to several product recalls.