Weight loss medications and increasing non-alcoholic beverage choices are causing consumers in the U.S. to purchase fewer sodas.
Despite this trend, Coca-Cola announced strong earnings for the second quarter, backed by significant global demand for its carbonated drinks, leading the company to revise its full-year outlook upward.
“We are pleased with our second-quarter results, which showed solid growth in revenue and operating income despite a changing market,” stated James Quincey, CEO of Coca-Cola.
In North America, however, the company experienced a 1% decline in volume sales during the quarter. Quincey remarked that this decrease in the U.S. market was due to “softness in away-from-home channels,” affecting its water, sports drinks, coffee, tea, and soda offerings.
Coca-Cola noted that the drop was partially balanced by the success of its Fairlife milk and the strong performance of its flagship soda, Coke, which ranked first and second in retail sales growth for the period.
To address the decline, Quincey mentioned that Coca-Cola is collaborating with food chains to integrate its sodas into combo meals, including efforts with McDonald’s to enhance the fast food chain’s $5 meal deal that comes with a soft drink.
Overall, Coca-Cola exceeded Wall Street’s expectations, reporting $12.4 billion in revenue for the second quarter, equating to about $0.84 per share. Analysts had predicted the company would generate approximately $11.76 billion in revenue, or around $0.81 per share.
The company has also revised its forecast for organic revenue growth to between 9% and 10%, an increase from the prior estimate of 8% to 9%.
Pepsi is facing similar challenges in attracting U.S. consumers, who are increasingly opting for products geared towards weight loss and healthier lifestyles. A Gallup poll indicates that young adults in the U.S. are consuming significantly less alcohol than before. Earlier in July, Pepsi attributed its lackluster second-quarter performance to a series of product recalls.