Weight loss medications and non-alcoholic beverage options are leading consumers in the U.S. to reduce their soda purchases.
Despite this trend, Coca-Cola reported strong earnings for the second quarter, buoyed by high global demand for its beverage products, which has led the company to raise its full-year forecast.
James Quincey, the CEO of Coca-Cola, expressed optimism about the company’s performance, stating, “We are encouraged with our second-quarter results, which delivered solid topline and operating income growth in an ever-changing landscape.”
However, the company faced a 1% decline in volume sales in North America during the quarter. Quincey noted that this drop was largely due to “softness in away-from-home channels,” impacting water, sports drinks, coffee, tea, and soda offerings.
This decline was somewhat offset by the popularity of Fairlife milk and Coca-Cola itself, which ranked first and second in retail sales growth for the quarter. To combat the downturn, Coca-Cola is collaborating with food chains to include its sodas in combo meal deals. Reports indicate that the company is working with McDonald’s to enhance its $5 meal deal, which features a soft drink.
Overall, Coca-Cola surpassed Wall Street’s expectations, reporting $12.4 billion in revenue for the second quarter, translating to approximately $0.84 per share, while analysts had predicted around $11.76 billion or about $0.81 per share.
As a result, Coca-Cola has adjusted its forecast for organic revenue growth to between 9% and 10%, an increase from the previous estimate of 8% to 9%.
PepsiCo is also facing challenges in the U.S. market as consumers shift towards products that emphasize weight loss and healthier lifestyles. A Gallup poll indicates that young adults in the U.S. are consuming significantly less alcohol than before. In early July, Pepsi cited a series of product recalls as a factor in its lackluster performance for the second quarter.