The rise of weight loss medications and a move toward non-alcoholic beverages have led to a decline in soda purchases among consumers in the United States.
Despite this trend, Coca-Cola reported strong earnings for the second quarter on Tuesday, buoyed by high global demand for its beverages, which prompted the company to raise its full-year revenue guidance. CEO James Quincey expressed optimism about the results, highlighting solid growth in both topline revenue and operating income amid changing market conditions.
However, Coca-Cola faced a 1% decline in volume sales in North America during the same quarter. Quincey attributed this drop to decreased consumption in away-from-home channels, impacting products including water, sports drinks, coffee, tea, and soda.
The decline in soda sales was somewhat mitigated by the popularity of the company’s Fairlife milk and its flagship drink, Coke, which ranked first and second in retail sales growth, respectively.
To counteract the volume decrease, Coca-Cola is partnering with fast food chains to incorporate its sodas into combo meals. The company is reportedly collaborating with McDonald’s to enhance its $5 meal deal that includes a soft drink.
Overall, Coca-Cola surpassed analysts’ expectations, reporting revenues of $12.4 billion for the second quarter, translating to about $0.84 per share, better than the anticipated $11.76 billion and $0.81 per share as forecasted by FactSet.
Looking ahead, Coca-Cola has revised its forecast for organic revenue growth to between 9% and 10%, an increase from its previous estimate of 8% to 9%.
Similarly, Pepsi has encountered challenges in attracting U.S. consumers, who are increasingly favoring healthier alternatives. The company recently cited a series of product recalls as a key factor in its lackluster second quarter results.