Weight loss medications and non-alcoholic beverages are leading U.S. consumers to reduce their soda purchases.
Despite this trend, Coca-Cola reported strong earnings for the second quarter, with robust global demand for its products prompting the company to raise its full-year outlook. Coca-Cola’s CEO, James Quincey, expressed optimism about the results, highlighting solid growth in both revenue and operating income amidst a shifting market landscape.
However, North America experienced a 1% decline in volume sales during the quarter. Quincey attributed this decrease primarily to weaker sales in “away-from-home channels,” which encompass its offerings in water, sports drinks, coffee, tea, and soda. The decline was somewhat mitigated by the success of its Fairlife milk and Coca-Cola, which ranked first and second in retail sales growth for the quarter.
To counteract the sales downturn, Quincey mentioned that Coca-Cola is collaborating with food chains to include its soda in combo meal offerings. This partnership reportedly includes efforts with McDonald’s to enhance a $5 meal deal that comes with a soft drink.
Overall, Coca-Cola exceeded Wall Street expectations, reporting $12.4 billion in revenue for the second quarter, translating to approximately $0.84 per share. Analysts had predicted a revenue of around $11.76 billion or $0.81 per share.
The company has now adjusted its forecast for organic revenue growth to between 9% and 10%, an improvement from its previous estimate of 8% to 9%.
Similar to Coca-Cola, Pepsi is facing challenges in attracting U.S. consumers, who are increasingly drawn to products that emphasize weight loss and healthier lifestyles. A Gallup poll indicates a notable decline in alcohol consumption among young adults in the U.S. In early July, Pepsi attributed its lackluster second quarter results to multiple product recalls.