Weight loss medications and the rise of non-alcoholic alternatives are causing U.S. consumers to reduce their soda purchases.
Despite this trend, Coca-Cola reported strong second-quarter earnings, helped by robust global demand for its beverages, prompting the company to raise its full-year forecast.
Coca-Cola’s CEO, James Quincey, expressed optimism about the company’s financial performance, stating, “We are encouraged with our second-quarter results, which delivered solid topline and operating income growth in an ever-changing landscape.”
In North America, however, the company’s volume sales fell by 1% during the quarter. Quincey attributed this decline to “softness in away-from-home channels,” which encompasses its water, sports drinks, coffee, tea, and soda products. He indicated that the decrease was somewhat balanced by the success of Fairlife milk and Coca-Cola itself, which outperformed other beverages in retail sales growth.
To combat the decline in sales, Coca-Cola is collaborating with food chains to include its soda products in combo meals. The company is reportedly working with McDonald’s to enhance the fast-food chain’s $5 meal deal, which incorporates a soft drink.
Overall, Coca-Cola exceeded Wall Street expectations in the second quarter, reporting $12.4 billion in revenue, or $0.84 per share, surpassing forecasts of $11.76 billion and $0.81 per share according to FactSet.
Additionally, Coca-Cola is now projecting organic revenue growth between 9% and 10%, an increase from its previous estimate of 8% to 9%.
Meanwhile, Pepsi is facing challenges in attracting U.S. consumers who are shifting towards weight loss products and healthier lifestyles. Recent trends indicate that young adults in the U.S. are consuming significantly less alcohol than before, as reported by a Gallup poll. In early July, Pepsi attributed its lackluster second-quarter performance to a series of product recalls.