Weight loss medications and an increasing variety of non-alcoholic beverages are leading American consumers to reduce their soda purchases.
Despite these challenges, Coca-Cola announced strong earnings for the second quarter on Tuesday, buoyed by robust global demand for its beverage lineup, which has led the company to raise its projected earnings for the year.
Coca-Cola CEO James Quincey expressed optimism about the second quarter results, noting solid growth in revenue and operating income amid a fluctuating market.
However, the company faced a 1% decline in volume sales in North America during the same period. Quincey attributed this drop to reduced demand in “away-from-home channels,” which encompasses beverages such as water, sports drinks, coffee, tea, and soda.
This decline was partially mitigated by the success of Fairlife milk and Coca-Cola’s namesake soda, both of which topped the list in retail sales growth for the quarter.
To counteract the drop in sales, Coca-Cola is collaborating with fast-food chains to include its sodas in combo meals. The company is reportedly working with McDonald’s to enhance the promotion of its $5 meal deal, which comes with a beverage.
Overall, Coca-Cola exceeded Wall Street expectations, reporting $12.4 billion in revenue for the second quarter, equating to approximately $0.84 per share. Analysts had anticipated revenues of around $11.76 billion, or roughly $0.81 per share.
Coca-Cola has now adjusted its forecast for organic revenue growth to a range of 9% to 10%, an increase from its prior estimate of 8% to 9%.
Similarly, Pepsi has been facing difficulties in engaging U.S. consumers, who are increasingly focusing on weight loss and healthier alternatives. A Gallup poll indicated that younger adults in the U.S. are consuming significantly less alcohol than in previous years. Pepsi recently cited a series of product recalls as a contributing factor to its lackluster performance in the second quarter.