Weight loss medications and the rise of non-alcoholic beverages are causing American consumers to hold back on soda purchases.
Despite this trend, Coca-Cola reported strong earnings for the second quarter, driven by solid global demand for its beverages, prompting the company to increase its full-year guidance. CEO James Quincey expressed optimism about the results, noting solid growth in revenue and operating income amidst a changing market.
However, Coca-Cola experienced a 1% decline in volume sales in North America, attributed to weaker performance in away-from-home channels, which encompass water, sports drinks, coffee, tea, and sodas. The decline was partly offset by strong sales of Fairlife milk and the Coca-Cola brand itself, which ranked top in retail sales growth during the quarter.
To combat the downturn, Coca-Cola is partnering with food chains to include its beverages in combo meals. The company is reportedly collaborating with McDonald’s to enhance the appeal of its $5 meal deal, which features a soft drink.
Coca-Cola surpassed Wall Street expectations with second-quarter revenues of $12.4 billion, translating to approximately $0.84 per share, compared to analysts’ forecast of $11.76 billion or about $0.81 per share, according to FactSet. The company has revised its organic revenue growth forecast to a range of 9% to 10%, up from the previous estimate of 8% to 9%.
Similarly, Pepsi has faced challenges in attracting U.S. consumers, who are increasingly leaning towards products that promote weight loss and healthier lifestyles. This shift in consumer preferences has contributed to Pepsi’s lackluster performance, exacerbated by product recalls earlier in July.