Weight loss medications and non-alcoholic alternatives are causing U.S. consumers to hesitate in purchasing sodas. Despite this trend, Coca-Cola reported strong second-quarter earnings, bolstered by significant global demand for its beverages, and has raised its full-year guidance.
Coca-Cola CEO James Quincey expressed optimism about the company’s performance, highlighting solid topline and operating income growth amidst shifting market dynamics.
However, the company faced a 1% decline in volume sales in North America during the quarter. Quincey explained that the downturn in the U.S. division was due to “softness in away-from-home channels,” which includes categories like water, sports drinks, coffee, tea, and soda.
This decline was somewhat offset by the success of Fairlife milk and Coca-Cola itself, which ranked first and second in retail sales growth.
To counteract the slump, Coca-Cola plans to collaborate with food chains to integrate its sodas into combo meals. Among its initiatives, the company is said to be partnering with McDonald’s to enhance the appeal of its $5 meal deal, which includes a soft drink.
Coca-Cola’s financial results exceeded expectations, reporting $12.4 billion in revenue for the quarter, amounting to approximately $0.84 per share. Analysts had anticipated revenues of $11.76 billion, or about $0.81 per share.
The company now predicts organic revenue growth of 9% to 10%, adjusting its previous forecast of 8% to 9%.
Similarly, Pepsi is facing challenges in capturing the attention of U.S. consumers, who are increasingly favoring products that align with healthier lifestyles and weight loss. In early July, Pepsi attributed its subdued second-quarter performance to a series of product recalls.