Weight loss medications and the increasing popularity of non-alcoholic beverages are causing American consumers to rethink their soda purchases.
Despite these trends, Coca-Cola reported strong earnings for the second quarter on Tuesday, fueled by significant global demand for its products. As a result, the company has raised its full-year guidance.
“We are pleased with our second-quarter performance, which showed solid growth in both revenue and operating income amidst a rapidly changing market,” stated Coca-Cola’s CEO, James Quincey.
However, in North America, the company saw a 1% decline in volume sales during the quarter. Quincey attributed this drop for the U.S. segment to a downturn in “away-from-home channels,” which include water, sports drinks, coffee, tea, and soda.
The volume decrease was somewhat offset by the success of its Fairlife milk brand and Coca-Cola itself, both of which ranked high in retail sales growth during the quarter.
To counteract the decline, Coca-Cola is partnering with food chains to include its beverages in combo meals. Reports indicate that the company is collaborating with McDonald’s to enhance the appeal of its $5 meal deal, which includes a soft drink.
Overall, Coca-Cola exceeded Wall Street projections. In the second quarter, the company reported revenues of $12.4 billion, equating to approximately $0.84 per share, while analysts had anticipated $11.76 billion and around $0.81 per share.
Coca-Cola has revised its organic revenue growth forecast, now estimating an increase of 9% to 10%, up from the earlier prediction of 8% to 9%.
Meanwhile, Pepsi is also facing challenges in attracting U.S. consumers who are increasingly focused on weight loss and healthier lifestyles. A Gallup poll indicates that younger Americans are consuming less alcohol than in the past. In early July, Pepsi attributed its lackluster second-quarter results to a series of product recalls.