Weight loss medications and an increase in non-alcoholic drink options are causing a decline in soda purchases among consumers in the U.S. Despite this trend, Coca-Cola reported strong earnings for the second quarter, driven by a high global demand for its beverages, which led the company to revise its full-year forecast upwards.
James Quincey, CEO of Coca-Cola, stated, “We are encouraged with our second-quarter results, which delivered solid topline and operating income growth in an ever-changing landscape.” However, the North American market saw a 1% decrease in volume sales during the quarter. Quincey noted that the downturn was largely due to reduced sales in “away-from-home channels,” which encompass various beverages, including soda, water, coffee, and sports drinks.
The decline in volume sales was somewhat cushioned by success in the company’s Fairlife milk products and its flagship soda, Coca-Cola, which achieved significant retail sales growth during this period. To combat the sales drop, Coca-Cola is collaborating with food chains to incorporate its sodas into combo meals. Reports indicate that the company is working closely with McDonald’s to enhance its $5 meal deal, which includes a soda.
Coca-Cola’s overall performance exceeded Wall Street expectations, posting $12.4 billion in revenue during the second quarter, equating to roughly $0.84 per share. Analysts had predicted revenue of $11.76 billion, or about $0.81 per share.
As a result of its strong performance, Coca-Cola has adjusted its forecast for organic revenue growth to between 9% and 10%, a notable increase from its previous estimate of 8% to 9%.
Meanwhile, Pepsi is also facing challenges in the U.S. market as consumers lean towards healthier options and products aimed at weight loss. In early July, Pepsi attributed its disappointing second-quarter results to several product recalls.