Consumers in the U.S. are increasingly postponing soda purchases due to the rising popularity of weight loss medications and non-alcoholic beverages.
Despite this trend, Coca-Cola reported strong second-quarter earnings on Tuesday, fueled by significant global demand for its beverages and leading to an upgraded full-year forecast. CEO James Quincey expressed optimism about the company’s performance, highlighting the solid growth in revenue and operating income amid a shifting marketplace.
However, Coca-Cola experienced a 1% decline in volume sales in North America during the quarter. Quincey attributed the downturn in the U.S. division to reduced sales in away-from-home channels, which encompass water, sports drinks, coffee, tea, and soda products. This decline was somewhat balanced by gains from Fairlife milk and Coca-Cola itself, which ranked first and second in retail sales growth.
To counteract the decrease in volume, Quincey noted that Coca-Cola is collaborating with food chains to include its beverages in combo meal deals. This includes initiatives with McDonald’s to enhance its $5 meal deal, which comes with a soft drink.
Overall, Coca-Cola outperformed Wall Street predictions, reporting $12.4 billion in revenue for the second quarter, translating to approximately $0.84 per share. Analysts had anticipated revenues of $11.76 billion, or about $0.81 per share.
The company has adjusted its forecast for organic revenue growth to between 9% and 10%, an increase from the previous estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in attracting U.S. consumers, who are gravitating towards health-conscious options and weight loss products. Recent data suggests that young adults in the U.S. are consuming significantly less alcohol than before. In July, Pepsi attributed its lackluster second quarter to a series of product recalls.