Weight loss medications and non-alcoholic alternatives are causing consumers in the U.S. to hesitate in purchasing sodas.
Despite these factors, Coca-Cola reported strong earnings for the second quarter, largely due to robust global demand for its beverages, leading the company to increase its full-year forecast.
James Quincey, CEO of Coca-Cola, expressed optimism about the second-quarter results, which showed significant growth in both revenue and operating income in a fluctuating market.
However, Coca-Cola experienced a 1% decline in volume sales in North America during the quarter. Quincey indicated that the decrease was mainly due to weakened performance in away-from-home channels, which encompass products like water, sports drinks, coffee, tea, and sodas.
The decline in volume was somewhat mitigated by the success of Fairlife milk and Coca-Cola itself, which ranked first and second in retail sales growth for the quarter.
To counteract the sales dip, Coca-Cola plans to collaborate with food chains to include its sodas in combo meals. Reports suggest that the company is working with McDonald’s to enhance its $5 meal deal, which includes a soft drink.
Overall, Coca-Cola surpassed Wall Street projections, reporting $12.4 billion in revenue for the second quarter, equating to approximately $0.84 per share. This exceeded analysts’ expectations of $11.76 billion in revenue and $0.81 per share, according to FactSet.
The company has adjusted its forecast for organic revenue growth to between 9% and 10%, an increase from the previous estimate of 8% to 9%.
Pepsi, like Coca-Cola, is facing challenges in capturing the attention of U.S. consumers who are increasingly opting for weight-loss-oriented and healthier products. A recent Gallup poll revealed that young adults in the U.S. are consuming significantly less alcohol than before. In early July, Pepsi attributed its lackluster second-quarter performance to a series of product recalls.