The rise of weight loss medications and non-alcoholic alternatives is contributing to a decline in soda consumption in the U.S. market.
Despite this trend, Coca-Cola reported strong earnings for the second quarter on Tuesday, buoyed by significant global demand for its beverages. As a result, the company has raised its projections for the full year.
Coca-Cola’s CEO, James Quincey, expressed optimism about the company’s performance, stating, “We are encouraged with our second-quarter results, which delivered solid topline and operating income growth in an ever-changing landscape.”
However, in North America, volume sales fell by 1% during the quarter. Quincey pointed out that the drop in the U.S. segment resulted from “softness in away-from-home channels,” which encompasses water, sports drinks, coffee, tea, and sodas.
The decline was somewhat mitigated by the success of the Fairlife milk range and Coca-Cola itself, which performed well in retail sales growth during the quarter.
To address the volume decrease, Coca-Cola is partnering with fast-food chains to integrate its beverages into combo meals. Notably, the company is working with McDonald’s to enhance its $5 meal deal that includes a soft drink.
Coca-Cola surpassed Wall Street expectations, reporting second-quarter revenue of $12.4 billion, equating to about $0.84 per share. Analysts had anticipated revenue of $11.76 billion, approximately $0.81 per share.
The company now expects organic revenue growth between 9% and 10%, an increase from its earlier forecast of 8% to 9%.
Similarly, Pepsi is facing challenges in engaging U.S. consumers who are increasingly focused on health and weight management. A recent Gallup poll indicates that young adults in the U.S. are consuming significantly less alcohol. In early July, Pepsi cited a series of product recalls for its lackluster performance in the second quarter.