Weight loss medications and non-alcoholic drink options are contributing to a reduction in soda purchases among consumers in the United States.
Despite this trend, Coca-Cola reported strong earnings for the second quarter, driven by robust global customer demand, which led the company to raise its full-year forecast. CEO James Quincey expressed optimism about the company’s financial performance, highlighting solid growth in revenue and operating income amidst a rapidly changing market.
In North America, however, Coca-Cola experienced a 1% decline in volume sales for the quarter. Quincey attributed the drop in its U.S. division primarily to decreased sales in away-from-home channels, encompassing water, sports drinks, tea, and soda.
This decline was somewhat mitigated by strong sales from its Fairlife milk brand and its flagship soda, Coke, which ranked first and second for retail sales growth in the quarter. To counteract volume losses, Coca-Cola is collaborating with restaurants to include its soda in combo meal offerings. Reportedly, the company is partnering with McDonald’s to enhance its $5 meal deal, which features a soft drink.
Overall, Coca-Cola outperformed Wall Street expectations with reported revenues of $12.4 billion for the second quarter, translating to earnings of about $0.84 per share. Analysts had anticipated revenue of $11.76 billion and earnings of roughly $0.81 per share, according to FactSet.
The company has adjusted its forecast for organic revenue growth to between 9% and 10%, an increase from its prior estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in capturing the interest of U.S. consumers, who are shifting towards products that support weight loss and healthier lifestyles. A Gallup poll indicates that young adults in the U.S. are consuming significantly less alcohol than before. In early July, Pepsi attributed its lackluster performance in the second quarter to a series of product recalls.