Recent trends in weight loss drugs and non-alcoholic beverage options are leading American consumers to cut back on soda purchases.
Despite this shift, Coca-Cola reported strong second-quarter earnings, bolstered by consistent global demand for its products. This positive performance has prompted the company to increase its full-year revenue forecast.
Coca-Cola CEO James Quincey expressed optimism about the results, highlighting growth in both revenue and operating income amidst a challenging market.
However, the company faced a 1% decline in volume sales in North America for the quarter. Quincey attributed this decrease to a slowdown in away-from-home channels, which include water, sports drinks, coffee, tea, and soda.
The decline was somewhat mitigated by the performance of Fairlife milk and the Coca-Cola brand soda, both of which ranked highly in retail sales growth for the period.
To counter the drop in soda sales, Quincey mentioned that Coca-Cola is collaborating with food chains to incorporate its drinks into combo meals. The company is reportedly working with McDonald’s to enhance the fast-food chain’s $5 meal deal, which includes a soft drink.
Coca-Cola exceeded Wall Street’s expectations, reporting revenues of $12.4 billion and earnings of approximately $0.84 per share. Analysts had predicted revenues of around $11.76 billion and earnings of $0.81 per share.
The company’s updated forecast now estimates organic revenue growth of 9% to 10%, an increase from the previous projection of 8% to 9%.
Pepsi is also facing challenges in attracting U.S. consumers, who are gravitating toward products that support weight loss and healthier lifestyles. A recent Gallup poll indicates that young adults in the U.S. are drinking significantly less alcohol than in the past. In July, Pepsi attributed its lackluster second-quarter performance to a series of product recalls.