Consumers in the U.S. are increasingly holding back on purchases of sodas, influenced by weight loss medications and a rise in non-alcoholic beverage options.
Despite this trend, Coca-Cola reported strong second-quarter earnings, supported by high global demand for its beverages, which led the company to raise its full-year guidance. CEO James Quincey expressed optimism about the company’s performance, noting notable growth in revenue and operating income amid a shifting market.
However, the company did see a 1% decline in volume sales in North America during the same period. Quincey attributed this drop to weakness in “away-from-home channels,” which encompasses sales of water, sports drinks, coffee and tea, as well as soda.
This decline was somewhat mitigated by increased sales of Fairlife milk and Coca-Cola, which ranked first and second in retail sales growth respectively for the quarter. To address volume challenges, Coca-Cola is exploring partnerships with fast-food chains like McDonald’s to incorporate its beverages into combo meals, directly aiming to enhance the sales of popular meal deals.
For the second quarter, Coca-Cola reported revenues of $12.4 billion, or $0.84 per share, surpassing Wall Street expectations which estimated revenues at $11.76 billion, or about $0.81 per share. The company also adjusted its forecast for organic revenue growth to between 9% and 10%, an increase from its previous estimate of 8% to 9%.
PepsiCo faces similar challenges in attracting U.S. consumers who are leaning more towards health-conscious options. The company recently attributed its lackluster second-quarter results to multiple product recalls affecting sales.