Weight loss medications and a rise in non-alcoholic beverage options have led to a decrease in soda consumption in the United States.
Despite these challenges, Coca-Cola reported strong second-quarter earnings, driven by solid global demand for its beverages, leading the company to raise its full-year forecasts.
Coca-Cola’s CEO, James Quincey, expressed optimism about the company’s performance, highlighting strong top-line growth in a changing market. However, the company experienced a 1% decline in volume sales in North America during the quarter. Quincey attributed this decrease to weaker performance in “away-from-home channels,” which encompass water, sports drinks, coffee and tea, as well as traditional sodas.
The decline in volume was somewhat mitigated by the success of Fairlife milk and Coca-Cola itself, which ranked first and second, respectively, in retail sales growth.
To counteract the drop in soda sales, Coca-Cola is collaborating with fast-food chains to include its beverages in combo meal deals. Reports indicate cooperation with McDonald’s to enhance the appeal of the chain’s $5 meal deal, which comprises a soft drink.
Coca-Cola’s second-quarter revenue reached $12.4 billion, approximately $0.84 per share, surpassing Wall Street expectations, which predicted revenues of $11.76 billion or around $0.81 per share.
The company has now revised its forecast for organic revenue growth to between 9% and 10%, up from the earlier estimate of 8% to 9%.
Similarly, Pepsi has faced difficulties attracting U.S. consumers, as more people gravitate towards products that emphasize weight loss and healthier lifestyles. A recent Gallup poll indicated that younger adults in the U.S. are drinking significantly less alcohol than before. In early July, Pepsi attributed its lackluster second-quarter performance to a series of product recalls.