Weight loss medications and non-alcoholic alternatives are leading consumers in the U.S. to reduce their soda purchases.
Despite this trend, Coca-Cola reported strong second-quarter earnings, benefiting from robust global demand for its beverages, leading the company to increase its outlook for the year. CEO James Quincey expressed optimism about the company’s results, noting solid growth in revenue and operating income despite a shifting market landscape.
However, Coca-Cola experienced a 1% decline in volume sales in North America during this quarter. Quincey indicated that this decline was mainly due to “softness in away-from-home channels,” which include products such as water, sports drinks, coffee, tea, and traditional sodas.
The decrease was somewhat balanced out by the popularity of Fairlife milk and Coca-Cola’s own products, with Coke achieving impressive retail sales growth.
To counteract the volume downturn, the company is collaborating with food chains to include its sodas in combo meals, particularly working with McDonald’s to enhance its $5 meal deal that comes with a soft drink.
For the second quarter, Coca-Cola exceeded Wall Street expectations, reporting $12.4 billion in revenue and earnings of approximately $0.84 per share, surpassing the anticipated $11.76 billion in revenue and $0.81 per share earnings.
Coca-Cola has revised its forecast for organic revenue growth, now expecting an increase between 9% and 10%, up from the earlier estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in grabbing the attention of health-conscious U.S. consumers who are increasingly opting for weight loss-focused products. In early July, Pepsi attributed its lackluster second-quarter results to a series of product recalls.