Consumer interest in weight loss medications and non-alcoholic beverages has led to a slowdown in soda purchases in the U.S. market.
Despite these challenges, Coca-Cola reported strong second-quarter earnings on Tuesday, thanks to high global demand for its products, which prompted the company to raise its full-year forecast.
Coca-Cola CEO, James Quincey, expressed his satisfaction with the company’s performance, highlighting solid growth in both revenue and operating income in a constantly evolving market.
However, the North American division experienced a 1% decline in volume sales during the quarter. Quincey explained that this drop was attributed to a decline in “away-from-home channels,” which encompasses water, sports drinks, coffee, tea, and soda products.
The decline in sales was partially balanced by success in the company’s Fairlife milk products and Coke itself, which ranked first and second in retail sales growth for the quarter.
To counteract the sales fall, Coca-Cola is partnering with fast-food chains to include its sodas in combo meals. Notably, the company is collaborating with McDonald’s to enhance its $5 meal deal, which features a soft drink.
Coca-Cola’s overall revenue exceeded Wall Street’s forecasts, reporting $12.4 billion during the second quarter, or approximately $0.84 per share, while analysts had expected around $11.76 billion, or about $0.81 per share.
The company has now increased its organic revenue growth outlook to between 9% and 10%, up from a previous expectation of 8% to 9%.
Similarly, PepsiCo is grappling with a shift in U.S. consumer preferences towards healthier options and weight loss products. In early July, Pepsi reported a subdued second-quarter performance, attributing it to a series of product recalls.