Consumers in the U.S. are increasingly opting for weight loss medications and non-alcoholic alternatives, resulting in a slowdown in soda purchases.
Despite these challenges, Coca-Cola reported strong second-quarter earnings on Tuesday, largely due to heightened global demand for its beverages, which has led the company to increase its full-year financial forecast.
“We are pleased with our second-quarter results, showcasing solid revenue and operating income growth amid an evolving market,” stated Coca-Cola CEO James Quincey.
Despite the overall performance, North America saw a 1% decline in volume sales during the quarter. Quincey noted that the drop for the U.S. division was influenced by “softness in away-from-home channels,” which includes a range of products such as water, sports drinks, coffee, tea, and sodas.
This decline was partially mitigated by strong sales of Fairlife milk and Coca-Cola itself, which ranked first and second in retail sales growth, respectively, during the quarter.
To address the volume drop, Coca-Cola is collaborating with food chains to incorporate its drinks into combo meals. Reports indicate that the company is partnering with McDonald’s to enhance its $5 meal deal, which includes a soft drink.
Coca-Cola surpassed Wall Street expectations in the second quarter, reporting revenues of $12.4 billion, equating to about $0.84 per share. Analysts had previously anticipated revenues of $11.76 billion, or roughly $0.81 per share, according to FactSet.
Looking ahead, the company now anticipates organic revenue growth of 9% to 10%, an increase from its earlier forecast of 8% to 9%.
In a similar vein, Pepsi has been facing difficulties in attracting U.S. consumers, who are progressively favoring products that emphasize weight loss and healthier lifestyles. A Gallup poll indicates that young adults in the U.S. are consuming significantly less alcohol than in previous years. In early July, Pepsi attributed its lackluster second-quarter performance to a series of product recalls.