Weight loss medications and non-alcoholic beverages are causing U.S. consumers to reduce their soda purchases.
Despite this trend, Coca-Cola reported strong second-quarter earnings, thanks to high global demand for its beverages, and has raised its full-year outlook.
Coca-Cola’s CEO, James Quincey, expressed optimism about the company’s performance, noting solid growth in top-line and operating income despite shifting market conditions.
However, the company did see a 1% decline in volume sales in North America during the quarter. Quincey indicated that this drop was largely due to weaker performance in channels outside the home, which includes water, sports drinks, coffee, tea, and soda.
This decline was somewhat mitigated by the success of Fairlife milk and Coca-Cola’s own products, which ranked first and second in retail sales growth for the quarter.
To combat falling sales, Coca-Cola is collaborating with fast-food restaurants to integrate its soda into combo meals, notably partnering with McDonald’s to enhance its $5 meal deal, which comes with a soft drink.
Coca-Cola exceeded Wall Street expectations, reporting $12.4 billion in revenue and earnings of about $0.84 per share, surpassing forecasts of $11.76 billion in revenue and $0.81 per share. The company has revised its projected organic revenue growth to between 9% and 10%, up from the previous estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in attracting U.S. consumers who lean towards weight loss products and healthier lifestyles. Additionally, the company attributed its weaker second-quarter performance to a series of recalls.