Weight loss medications and non-alcoholic alternatives are causing consumers in the U.S. to delay soda purchases.
Despite these trends, Coca-Cola reported strong earnings for the second quarter on Tuesday, fueled by increased global demand for its beverages, which led the company to enhance its full-year projections.
Coca-Cola’s CEO, James Quincey, stated, “We are encouraged with our second-quarter results, which delivered solid topline and operating income growth in an ever-changing landscape.”
However, the company saw a 1% drop in volume sales in North America during the quarter. Quincey explained that this decline in the U.S. was due to weaker sales in “away-from-home channels,” which encompass water, sports drinks, coffee, tea, and sodas.
The downturn was partially mitigated by the success of its Fairlife milk brand and Coca-Cola itself, which ranked first and second in retail sales growth for the quarter.
To counteract the decline, Coca-Cola is collaborating with restaurant chains to feature its sodas in combo meals. Reports indicate the company is partnering with McDonald’s to enhance the fast food chain’s $5 meal deal, which includes a beverage.
Overall, Coca-Cola exceeded analyst expectations, reporting $12.4 billion in revenue for the second quarter, translating to approximately $0.84 per share. Analysts had predicted revenue of $11.76 billion, roughly $0.81 per share, according to FactSet.
Coca-Cola also raised its forecast for organic revenue growth to between 9% and 10%, up from the previous estimate of 8% to 9%.
Like Coca-Cola, Pepsi is facing challenges in attracting U.S. consumers, who are increasingly opting for health-focused products for weight loss and healthier lifestyles. A Gallup poll indicates that young adults in the U.S. are drinking significantly less alcohol than in the past. In early July, Pepsi cited a series of product recalls as a contributing factor to its lackluster second-quarter performance.