Weight loss drugs and the rising popularity of non-alcoholic alternatives are causing U.S. consumers to reconsider their soda purchases.
Despite this trend, Coca-Cola reported strong earnings for the second quarter, bolstered by global demand, which led the company to increase its full-year projections. CEO James Quincey expressed satisfaction with the results, noting solid revenue and operating income growth in a dynamic market.
However, Coca-Cola experienced a 1% decline in volume sales in North America during the quarter. Quincey indicated that this dip was primarily due to weaker performance in “away-from-home channels,” which encompass water, sports drinks, coffee, tea, and soda products.
The decline was somewhat mitigated by successful sales of Fairlife milk and Coca-Cola’s flagship soft drinks, which ranked first and second in retail sales growth respectively for the quarter.
To combat the decrease, Coca-Cola is collaborating with food chains to incorporate its soda into meal combos. Reports suggest that the company is working with McDonald’s to enhance the value of its $5 meal deal, which includes a soft drink.
Overall, Coca-Cola surpassed Wall Street’s expectations, generating $12.4 billion in revenue, or approximately $0.84 per share. Analysts had anticipated revenues of $11.76 billion, roughly $0.81 per share, according to FactSet.
The company has also raised its forecast for organic revenue growth to between 9% and 10%, an increase from the previous estimate of 8% to 9%.
Pepsi, like Coca-Cola, is facing challenges in capturing the interest of U.S. consumers, who are increasingly opting for products that support weight loss and healthier choices. This trend has been compounded by a notable decrease in alcohol consumption among young adults in the U.S., as indicated by a Gallup poll. Earlier this month, Pepsi attributed its lackluster second quarter results to a series of product recalls.