Weight loss medications and growing interest in non-alcoholic alternatives are causing American consumers to reduce their soda purchases.
Despite this trend, Coca-Cola reported strong second-quarter earnings, fueled by robust global demand for its beverages. As a result, the company has increased its full-year forecast.
Coca-Cola CEO James Quincey expressed optimism about the company’s results, highlighting solid growth in both revenue and operating income amid a shifting market. However, North American volume sales saw a 1% decline during the quarter. Quincey attributed this drop to weaker sales in away-from-home channels, which include water, sports drinks, coffee, tea, and soda.
The decline was somewhat offset by the success of Fairlife milk and Coca-Cola’s own soda, which ranked first and second in retail sales growth during the quarter. To counteract the soft sales, Quincey mentioned that Coca-Cola is collaborating with food chains to integrate soda into combo meal deals, including a partnership with McDonald’s to enhance its $5 meal option that comes with a soft drink.
In terms of financial performance, Coca-Cola exceeded Wall Street’s expectations with reported revenue of $12.4 billion, or about $0.84 per share. Analysts had expected revenue around $11.76 billion, or approximately $0.81 per share.
The company has also raised its forecast for organic revenue growth to a range of 9% to 10%, up from its previous estimate of 8% to 9%.
Pepsi is facing similar challenges in capturing the interest of U.S. consumers, who are increasingly leaning towards products that support weight management and healthier lifestyles. Reports indicate that young adults in the U.S. are consuming significantly less alcohol than in the past. In early July, Pepsi acknowledged that a series of product recalls contributed to its lackluster performance in the second quarter.