Weight loss medications and non-alcoholic alternatives are causing a slowdown in soda purchases among consumers in the U.S.
Despite this trend, Coca-Cola announced strong second-quarter earnings on Tuesday, buoyed by robust global demand for its beverage products. This success led the company to enhance its full-year outlook.
Coca-Cola CEO James Quincey expressed optimism about the second-quarter results, highlighting the solid growth in both revenue and operating income amidst a constantly changing market.
Nevertheless, the company experienced a 1% decline in volume sales in North America during the quarter. Quincey noted that the drop in U.S. sales was influenced by reduced performance in “away-from-home channels,” which encompass water, sports drinks, coffee, tea, and soda.
The company indicated that this decline was somewhat mitigated by its Fairlife milk brand and its flagship soda, Coke, which ranked first and second in retail sales growth, respectively, for the quarter.
To counteract the decline in sales, Coca-Cola is collaborating with restaurant chains to incorporate its sodas into combo meals. Reports suggest that Coca-Cola is specifically partnering with McDonald’s to enhance the fast food chain’s $5 meal deal, which includes a beverage.
Overall, Coca-Cola exceeded analysts’ expectations, reporting $12.4 billion in revenue for the second quarter, equating to about $0.84 per share. This surpassed Wall Street’s forecast of $11.76 billion and approximately $0.81 per share.
The beverage giant now anticipates organic revenue growth in the range of 9% to 10%, a revision upward from its previous estimate of 8% to 9%.
Similarly, Pepsi has been facing challenges in attracting U.S. consumers, who are leaning towards products that emphasize weight loss and healthier lifestyles. Recent data indicates that young adults in the U.S. are consuming significantly less alcohol. In early July, Pepsi attributed its lackluster second-quarter performance to a series of product recalls.