Consumers in the U.S. are increasingly postponing soda purchases due to the rise of weight loss drugs and non-alcoholic alternatives. Despite this trend, Coca-Cola reported strong earnings for the second quarter, largely due to global demand for its beverages, prompting the company to enhance its full-year outlook.
Coca-Cola’s CEO, James Quincey, expressed optimism about the company’s performance, highlighting solid growth in revenue and operating income amidst a shifting market landscape.
However, the company’s volume sales in North America saw a 1% decline during the quarter. Quincey attributed this decrease to weaker sales in away-from-home channels, which encompass water, sports drinks, coffee, tea, and soda.
This drop was somewhat mitigated by the success of Fairlife milk and Coca-Cola itself, which ranked first and second in retail sales growth, respectively.
To counteract the sales decline, Coca-Cola is collaborating with food chains to include its beverages in combo meals. Reports indicate that the company is partnering with McDonald’s to enhance its $5 meal deal, which features a soft drink.
In terms of financial performance, Coca-Cola surpassed analysts’ predictions, recording $12.4 billion in revenue, or approximately $0.84 per share. Analysts had anticipated revenue to be around $11.76 billion, or roughly $0.81 per share.
The company has adjusted its forecast for organic revenue growth to between 9% and 10%, up from the previous estimate of 8% to 9%.
Pepsi is facing similar challenges, struggling to engage U.S. consumers who are increasingly choosing products focused on weight loss and healthier lifestyle choices. Additionally, a recent Gallup poll indicates that young adults in the U.S. are consuming significantly less alcohol than they did in the past. Pepsi attributed its lackluster second-quarter performance to a series of product recalls.