Weight loss medications and a growing preference for non-alcoholic beverages are causing consumers in the U.S. to cut back on soda purchases.
Despite this trend, Coca-Cola reported strong financial results for the second quarter, fueled by healthy global demand for its beverages. This success has led the company to revise its full-year revenue forecast upwards.
Coca-Cola CEO James Quincey expressed optimism about the company’s performance, noting solid growth in both revenue and operating income amidst a shifting market landscape.
However, the company’s volume sales in North America fell by 1% during the quarter. Quincey attributed the decline in the U.S. market to reduced sales in “away-from-home channels,” which encompass products like water, sports drinks, coffee, tea, and soda.
The decline was somewhat mitigated by strong sales of Fairlife milk and Coca-Cola itself, with the latter achieving impressive retail sales growth, ranking first and second in its category during the quarter.
To counteract the sales slump, Coca-Cola is collaborating with food chains to incorporate its sodas into combo meals. The company is reportedly working with McDonald’s to enhance the appeal of its $5 meal deal that includes a soft drink.
Overall, Coca-Cola surpassed analysts’ expectations, reporting $12.4 billion in revenue for the second quarter, equating to approximately $0.84 per share. Analysts had anticipated the company would generate $11.76 billion in revenue, or roughly $0.81 per share.
Coca-Cola has now adjusted its forecast for organic revenue growth to between 9% and 10%, improving from its earlier projection of 8% to 9%.
In a similar vein, Pepsi has been facing challenges in attracting U.S. consumers, who are leaning more towards products that support weight loss and healthier lifestyles. Recent polling indicates young adults in the U.S. are consuming significantly less alcohol than in previous years. In July, Pepsi cited a series of product recalls as a factor in its disappointing performance during the second quarter.