Weight loss medications and non-alcoholic alternatives are leading U.S. consumers to reduce their soda purchases.
Despite these trends, Coca-Cola reported strong earnings for the second quarter, largely fueled by robust global demand for its beverage products, prompting the company to increase its full-year outlook.
Coca-Cola CEO James Quincey stated, “We are encouraged with our second-quarter results, which delivered solid top-line and operating income growth in an ever-changing landscape.”
In North America, however, volume sales saw a decline of 1% during the quarter. Quincey attributed this decrease to “softness in away-from-home channels,” which encompasses its offerings in water, sports drinks, coffee, tea, and soda.
The decline was somewhat mitigated by the success of its Fairlife milk brand and Coca-Cola itself, which ranked first and second in retail sales growth respectively for the quarter.
To counteract the downturn, Quincey noted that Coca-Cola is collaborating with food chains to incorporate its sodas into combo meal deals. The company is reportedly partnering with McDonald’s to enhance the fast-food chain’s $5 meal deal that includes a soft drink.
Overall, Coca-Cola exceeded Wall Street’s expectations, reporting $12.4 billion in revenue for the second quarter, translating to approximately $0.84 per share. Analysts had predicted revenue of $11.76 billion, or about $0.81 per share.
The company also revised its forecast for organic revenue growth, now estimating it to be between 9% and 10%, up from the prior estimate of 8% to 9%.
Similarly, Pepsi is finding it challenging to engage U.S. consumers who are increasingly inclined towards products that support weight loss and healthier lifestyles. In early July, Pepsi cited a series of product recalls as a factor in its lackluster second-quarter performance.