Weight loss medications and the rise of non-alcoholic alternatives are leading American consumers to reduce their soda purchases.
Despite this trend, Coca-Cola reported strong earnings for the second quarter, bolstered by a solid demand worldwide for its beverages, and subsequently raised its full-year projections. CEO James Quincey stated, “We are encouraged with our second-quarter results, which delivered solid topline and operating income growth in an ever-changing landscape.”
In North America, however, volume sales dipped by 1% during the quarter. Quincey attributed this decline to a decrease in “away-from-home channels,” encompassing products like water, sports drinks, coffee and tea, as well as sodas. The downturn was partially mitigated by strong performance from its Fairlife milk and Coca-Cola itself, which ranked first and second in retail sales growth, respectively.
To counter the decline in volume, Coca-Cola is collaborating with restaurant chains to integrate its sodas into combo meals. Reports indicate that the company is working with McDonald’s to enhance its $5 meal deal, which includes a soft drink.
Overall, Coca-Cola surpassed analysts’ projections, recording $12.4 billion in revenue for the second quarter, equating to about $0.84 per share. Wall Street had anticipated revenues of $11.76 billion, or roughly $0.81 per share.
The company has updated its forecast, now expecting organic revenue growth between 9% and 10%, an increase from the previous estimate of 8% to 9%.
Likewise, Pepsi faces challenges in attracting U.S. consumers, who are increasingly leaning towards products that emphasize weight loss and healthier lifestyles. A Gallup poll indicates that young adults in the U.S. are drinking significantly less alcohol than before. In early July, Pepsi attributed its lackluster second quarter results to a series of product recalls.