Consumers in the U.S. are increasingly opting for weight loss medications and non-alcoholic beverages, leading to a slowdown in soda purchases.
Despite this trend, Coca-Cola reported strong earnings for the second quarter on Tuesday, bolstered by high global demand for its beverage products. As a result, the company has raised its projections for the full year.
James Quincey, CEO of Coca-Cola, expressed optimism about their second-quarter performance, highlighting solid growth in revenue and operating income amidst a shifting market landscape.
However, in North America, volume sales dropped by 1% during the quarter. Quincey noted that the decline in sales for the U.S. segment was largely due to “softness in away-from-home channels,” which encompasses its soda, as well as water, sports drinks, coffee, and tea products.
The company attributed part of the sales decline to its Fairlife milk brand and its flagship soda, Coke, which performed well in retail sales growth. To combat the downturn, Coca-Cola is collaborating with food chains to integrate its sodas into combo meal offerings. Reports indicate that the company is working with McDonald’s to enhance the fast-food chain’s $5 meal deal that includes a soft drink.
Coca-Cola exceeded Wall Street forecasts, reporting revenue of $12.4 billion for the second quarter, or approximately $0.84 per share, surpassing expectations of $11.76 billion, which equated to around $0.81 per share.
The company revised its organic revenue growth forecast to between 9% and 10%, an increase from the prior estimate of 8% to 9%.
PepsiCo is also facing challenges in attracting U.S. consumers, who are gravitating towards healthier and weight loss-focused options. In early July, the company cited several product recalls as key factors contributing to its underwhelming second quarter results.