Weight loss medications and non-alcoholic alternatives are causing consumers in the U.S. to refrain from purchasing sodas.
Despite this trend, Coca-Cola reported strong second-quarter earnings on Tuesday, attributed to solid global demand for its beverages, leading the company to increase its full-year outlook.
Coca-Cola’s CEO, James Quincey, expressed optimism about the second-quarter results, highlighting the growth in both revenue and operating income amid a shifting market.
However, the company’s volume sales in North America dropped by 1% in the quarter. Quincey noted that the decline in its U.S. division was linked to weak performance in away-from-home channels, which encompass its water, sports drinks, coffee, tea, and soda products.
The volume decline was somewhat balanced by the success of its Fairlife milk brand and Coca-Cola itself, which ranked first and second in retail sales growth for the quarter.
To counteract the decrease, Quincey indicated that Coca-Cola is collaborating with restaurant chains to include its beverages in combo meals, with efforts underway with McDonald’s to enhance its $5 meal deal, which features a soft drink.
Overall, the company exceeded analysts’ expectations, reporting $12.4 billion in revenue for the second quarter, amounting to roughly $0.84 per share. Wall Street had predicted revenue of $11.76 billion, or about $0.81 per share.
Coca-Cola has revised its forecast for organic revenue growth to between 9% and 10%, an increase from the earlier estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in engaging U.S. consumers, who are now gravitating towards products that emphasize weight loss and healthier choices. A Gallup poll indicates that young adults in the U.S. are consuming significantly less alcohol than in the past. Earlier in July, Pepsi cited a series of product recalls as reasons for its disappointing second-quarter performance.