Americans are increasingly refraining from purchasing sodas, influenced by weight loss medications and healthier non-alcoholic alternatives.
Despite this trend, Coca-Cola reported strong earnings for the second quarter, buoyed by significant global demand for its beverage products, which led the company to revise its full-year forecasts upwards.
Coca-Cola’s CEO, James Quincey, expressed satisfaction with the second-quarter results, highlighting robust revenue and operating income amid a changing market landscape.
However, in North America, the company experienced a 1% decline in volume sales during the quarter. Quincey noted that this downturn in the U.S. market was largely due to a slowdown in sales from “away-from-home channels,” including its offerings of water, sports drinks, coffee, tea, and soda.
The decline was somewhat mitigated by growth in its Fairlife milk brand and its flagship Coca-Cola drink, which ranked first and second in retail sales growth during the quarter.
To counteract the drop in soda sales, Coca-Cola is collaborating with food chains to incorporate its products into combo meals. Reports suggest that the company is working with McDonald’s to enhance its $5 meal deal, which includes a soft drink.
Coca-Cola’s performance exceeded Wall Street expectations, reporting $12.4 billion in revenue for the second quarter, amounting to approximately $0.84 per share. Analysts had predicted revenue of $11.76 billion, or about $0.81 per share, according to FactSet.
The company has increased its organic revenue growth forecast to between 9% and 10%, up from the previous estimate of 8% to 9%.
Similarly, Pepsi has faced challenges in attracting U.S. consumers, who are increasingly leaning towards products focused on weight loss and healthier options. A growing trend among young adults shows a significant decrease in alcohol consumption, as reported by a Gallup poll. Pepsi attributed its lackluster second-quarter performance to a series of product recalls.