Weight loss medications and non-alcoholic alternatives are leading U.S. consumers to hold back on soda purchases.
Despite this trend, Coca-Cola reported strong second-quarter earnings, largely due to robust global demand for its beverage lineup, which has prompted the company to raise its full-year forecasts.
Coca-Cola CEO James Quincey expressed optimism about the results, highlighting “solid topline and operating income growth in an ever-changing landscape.”
However, the company’s volume sales in North America saw a slight decline of 1% during the quarter. Quincey attributed this downturn to weak performance in “away-from-home channels,” which encompasses water, sports drinks, coffee, tea, and soda products.
Part of the decline was offset by the success of its Fairlife milk brand and its flagship soda, Coke, which ranked first and second respectively in retail sales growth for the quarter.
To counteract sales declines, Coca-Cola is collaborating with food chains to include its soda in combo meals. The company is reportedly partnering with McDonald’s to enhance the fast food chain’s $5 meal deal that features a soft drink.
Overall, Coca-Cola exceeded Wall Street forecasts, reporting $12.4 billion in revenue for the second quarter, equating to approximately $0.84 per share. Analysts had expected revenue of $11.76 billion, or about $0.81 per share.
The company has now increased its forecast for organic revenue growth to between 9% and 10%, up from the previous estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in engaging U.S. consumers, who are gravitating towards products that emphasize weight loss and healthier living options. A Gallup poll indicates that young adults in the U.S. are consuming significantly less alcohol than in previous years. Additionally, Pepsi cited a series of recalls as a factor contributing to its lackluster second-quarter performance.