Weight loss medications and non-alcoholic alternatives are causing American consumers to reconsider their soda purchases.
Despite this trend, Coca-Cola reported strong earnings for the second quarter, supported by a high global demand for its beverages. This positive performance has led the company to raise its full-year forecast.
Coca-Cola CEO James Quincey expressed optimism about the company’s second-quarter results, highlighting solid growth in revenue and operating income amid changing market conditions.
Nonetheless, the North American market saw a 1% drop in volume sales during the quarter. Quincey noted that this decline was primarily due to weaker performance in “away-from-home channels,” which encompass water, sports drinks, coffee, tea, and sodas.
This decrease was somewhat balanced by growth in Coca-Cola’s Fairlife milk line and its signature Coke beverage, which ranked first and second in retail sales growth for the quarter.
To counteract the volume decline, Coca-Cola is collaborating with fast-food chains to include its sodas in combo meals. Reports suggest that the company is partnering with McDonald’s to enhance the fast-food chain’s $5 meal deal, which features a soft drink.
Ultimately, Coca-Cola exceeded Wall Street’s expectations, reporting revenues of $12.4 billion for the second quarter, equating to approximately $0.84 per share. Analysts had anticipated revenues of $11.76 billion and earnings of about $0.81 per share.
As a result, Coca-Cola has now adjusted its forecast for organic revenue growth to between 9% and 10%, an increase from its earlier estimate of 8% to 9%.
In a similar vein, Pepsi has faced challenges in engaging U.S. consumers who are increasingly focused on healthier lifestyles and weight-conscious products. This shift is reflected in a recent Gallup poll indicating that young adults in the U.S. are consuming significantly less alcohol than before. In early July, Pepsi attributed its lackluster second-quarter performance to a series of product recalls.