Concerns over weight loss medications and the rise of non-alcoholic drink options have led to a decline in soda purchases, particularly in the U.S. market.
Despite this trend, Coca-Cola reported strong earnings for the second quarter on Tuesday, benefiting from solid global demand for its beverages, which enabled the company to elevate its full-year guidance.
Coca-Cola’s CEO, James Quincey, expressed optimism about the company’s performance, noting strong topline and operating income growth in a dynamic market. However, the company experienced a 1% drop in volume sales in North America during this quarter. Quincey attributed this decline to decreased performance in “away-from-home channels,” which include offerings such as water, sports drinks, coffee, tea, and sodas.
The decline was somewhat mitigated by growth in its Fairlife milk products and the strong performance of Coca-Cola itself, which ranked first and second in retail sales growth respectively during the quarter.
To counteract the sales dip, Quincey mentioned that Coca-Cola is partnering with food chains to ensure its sodas are included in combo meal deals. Notably, there are efforts to enhance McDonald’s $5 meal deal that comes with a soft drink.
Overall, Coca-Cola surpassed Wall Street projections, reporting $12.4 billion in revenue for the second quarter, equating to about $0.84 per share. Analysts had anticipated $11.76 billion in revenue, approximately $0.81 per share.
The company has revised its forecast for organic revenue growth, now estimating a range of 9% to 10%, an increase from the previous estimate of 8% to 9%.
Similarly, Pepsi has faced challenges in attracting U.S. consumers, who are increasingly favoring products that focus on weight loss and healthier alternatives. A recent Gallup poll revealed that young adults in the U.S. are consuming significantly less alcohol compared to previous years. Earlier in July, Pepsi pointed to a series of product recalls as a reason for its weaker performance in the second quarter.