Weight loss medications and non-alcoholic alternatives are causing consumers in the U.S. to reduce their soda purchases.
Despite this trend, Coca-Cola reported impressive earnings for the second quarter, reflecting strong global demand for its beverages, prompting the company to revise its full-year earnings outlook upwards.
Coca-Cola CEO James Quincey expressed optimism regarding the company’s results, highlighting significant growth in revenue and operating income despite a shifting market landscape.
However, Coca-Cola experienced a 1% decline in volume sales in North America during the quarter. Quincey attributed this drop to weakened sales in “away-from-home channels,” which include water, sports drinks, coffee, tea, and soda products. Nonetheless, the decline was somewhat mitigated by the success of Fairlife milk and Coca-Cola soda, which ranked first and second in retail sales growth for the quarter.
To counteract the sales downturn, Coca-Cola is collaborating with food chains to incorporate its sodas into combo meals. Notably, the company is working with McDonald’s to enhance the fast-food chain’s $5 meal deal, which includes a soft drink.
Coca-Cola’s second-quarter revenue reached $12.4 billion, amounting to approximately $0.84 per share, surpassing Wall Street’s expectations of $11.76 billion and $0.81 per share as predicted by FactSet.
The company has also adjusted its forecast for organic revenue growth to between 9% and 10%, increasing its prior estimate of 8% to 9%.
Like Coca-Cola, Pepsi faces challenges in attracting U.S. consumers, who are increasingly favoring products that emphasize weight loss and healthier lifestyles. A recent Gallup poll indicates that young adults in the U.S. are consuming less alcohol than in the past. In early July, Pepsi attributed its lackluster second-quarter performance to a series of product recalls.