Weight loss medications and non-alcoholic alternatives are leading consumers in the U.S. to cut back on soda purchases.
Despite this trend, Coca-Cola reported strong second-quarter earnings, boosted by high global demand for its beverages, which has led the company to raise its full-year outlook.
James Quincey, CEO of Coca-Cola, expressed optimism about the second-quarter results, which demonstrated solid growth in both revenue and operating income amid a shifting market.
However, Coca-Cola experienced a 1% decline in volume sales in North America during the quarter, a decrease attributed to weaker performance in away-from-home channels such as water, sports drinks, coffee, tea, and soda. Quincey noted that the decline in the U.S. was being offset by the success of Fairlife milk and significant retail growth for Coke.
To counteract the volume drop, Coca-Cola is collaborating with food chains to incorporate its soda products into combo meals. Reports indicate that the company is partnering with McDonald’s to enhance its $5 meal deal that features a soft drink.
Overall, Coca-Cola exceeded Wall Street’s expectations, reporting revenue of $12.4 billion for the second quarter, translating to about $0.84 per share. In comparison, analysts had predicted revenue of $11.76 billion, or roughly $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 also facing challenges in appealing to U.S. consumers who are increasingly focused on weight management and healthier lifestyles. Early July reports indicated that Pepsi’s subdued performance in the second quarter was partly due to multiple product recalls.