Weight loss medications and the rising popularity of non-alcoholic beverages have led to a slowdown in soda purchases among consumers in the U.S.
Despite these trends, Coca-Cola announced strong earnings for the second quarter, largely due to robust global demand for its beverage products. As a result, the company has raised its full-year guidance.
Coca-Cola’s CEO, James Quincey, expressed optimism about the company’s second-quarter performance, noting solid revenue and operating income growth in a dynamically changing market.
However, the company experienced a 1% decline in volume sales in North America during the quarter. Quincey attributed this drop in the U.S. market to “softness in away-from-home channels,” which encompasses products like water, sports drinks, coffee, tea, and soda.
The decline was somewhat balanced out by the performance of Fairlife milk and Coca-Cola, which saw significant retail sales growth, securing the top two spots in their category.
To combat the sales slump, Coca-Cola plans to collaborate with food chains to integrate its sodas into combo meal offerings. This includes a partnership with McDonald’s aimed at enhancing the fast-food chain’s $5 meal deal that features a soft drink.
Coca-Cola still exceeded Wall Street’s expectations, reporting $12.4 billion in revenue for the second quarter, which amounts to approximately $0.84 per share, compared to analysts’ predictions of $11.76 billion in revenue and $0.81 per share.
Looking ahead, Coca-Cola now expects organic revenue growth of 9% to 10%, an increase from its previous forecast of 8% to 9%.
Pepsi, similarly, has faced challenges in attracting U.S. consumers, who are gravitating towards weight loss-focused products and healthier choices. In early July, Pepsi pointed to a series of product recalls as a contributing factor to its lackluster performance in the second quarter.