In the United States, the rise of weight loss drugs and healthier beverage alternatives is causing a decline in soda purchases. Despite this trend, Coca-Cola reported strong second-quarter earnings on Tuesday, largely due to high global demand for its products, which prompted the company to raise its annual forecast.
Coca-Cola CEO James Quincey expressed optimism about the company’s performance, highlighting solid revenue and operating income growth in a shifting market. However, the company’s North American volume sales fell by 1% in the same quarter. Quincey attributed this decline to decreased sales in “away-from-home channels,” which encompass water, sports drinks, coffee, tea, and sodas.
The volume drop was somewhat mitigated by the success of Fairlife milk products and Coca-Cola’s flagship soda, which ranked first and second in retail sales growth, respectively. To counteract the volume decline, Quincey mentioned that Coca-Cola is collaborating with fast food chains to incorporate its sodas into combo meals, with McDonald’s reported to be enhancing its $5 meal deal that includes a soft drink.
Overall, Coca-Cola exceeded Wall Street’s expectations. For the second quarter, the company reported revenues of $12.4 billion, or about $0.84 per share, surpassing predictions of $11.76 billion in revenue, or approximately $0.81 per share, according to FactSet.
The company has also revised its organic revenue growth outlook, now anticipating an increase of between 9% and 10%, up from its previous estimate of 8% to 9%.
Pepsi has faced similar challenges in appealing to U.S. consumers, who are increasingly favoring products that align with weight loss or healthier lifestyles. A recent Gallup poll indicates that young adults in the U.S. are consuming significantly less alcohol than in the past. Earlier this month, Pepsi attributed its lackluster second-quarter results to a series of product recalls.