Weight loss medications and an increase in non-alcoholic beverage options are influencing U.S. consumers to reduce their soda purchases.
Despite this trend, Coca-Cola reported strong second-quarter earnings that reflected robust global demand, leading the company to raise its full-year expectations. CEO James Quincey expressed optimism about the company’s performance, noting solid growth in revenue and operating income amid a shifting market.
In North America, however, Coca-Cola experienced a 1% decline in volume sales for the quarter. Quincey explained during the earnings call that this drop was largely due to decreased demand in away-from-home channels, affecting categories such as water, sports drinks, coffee, tea, and soda.
The decline in certain segments was partially countered by the success of Coca-Cola’s Fairlife milk brand and the performance of its flagship soda, which ranked highly in retail sales growth. To combat volume losses, Quincey mentioned initiatives to partner with food chains like McDonald’s to integrate Coca-Cola products into popular combo meals.
Overall, Coca-Cola surpassed Wall Street’s expectations with a reported $12.4 billion in revenue, translating to approximately $0.84 per share, outpacing predictions of $11.76 billion. The company has adjusted its forecast for organic revenue growth to a range of 9% to 10%, an increase from its previous estimate of 8% to 9%.
Pepsi, on the other hand, is also facing challenges in capturing the interest of U.S. consumers who are increasingly focused on healthier lifestyle choices. The company indicated that a series of product recalls contributed to its lackluster second-quarter results.