Consumers in the U.S. are delaying soda purchases due to the rising popularity of weight loss medications and non-alcoholic beverages.
Despite this trend, Coca-Cola reported strong earnings for the second quarter, fueled by global demand for its soft drink offerings, leading the company to increase its full-year outlook. CEO James Quincey expressed optimism, highlighting positive growth in revenue and operating income amid changing market conditions.
In North America, however, the company experienced a 1% decline in volume sales. During the earnings call, Quincey attributed this dip to weaker performance in “away-from-home channels,” which encompass its water, sports drinks, coffee, tea, and soda lines. Nevertheless, sales of Fairlife milk and Coca-Cola’s soda brand partially mitigated the overall decline, with both items ranking highly in retail sales growth for the quarter.
To counteract the falling sales, Coca-Cola is collaborating with food chains to include its beverages in combo meal options. The company is reportedly partnering with McDonald’s to enhance the fast food giant’s $5 meal deal, which features a soft drink.
Coca-Cola exceeded Wall Street projections, generating $12.4 billion in revenue during the second quarter, translating to earnings of approximately $0.84 per share. Analysts had anticipated revenue of around $11.76 billion, or roughly $0.81 per share, according to FactSet.
The company has adjusted its outlook for organic revenue growth, now predicting an increase of 9% to 10%, up from the previous estimate of 8% to 9%.
Meanwhile, Pepsi is also facing challenges in attracting U.S. consumers, who are leaning towards healthier options and focusing on weight loss. A Gallup poll indicates a significant decrease in alcohol consumption among young adults in the U.S. In early July, Pepsi attributed its lackluster second quarter to various product recalls.