Weight loss medications and non-alcoholic alternatives are leading consumers in the U.S. to reduce soda purchases.
Despite this trend, Coca-Cola reported strong earnings for the second quarter, driven by robust global demand for its beverages. This success prompted the company to raise its annual forecasts. Coca-Cola CEO James Quincey expressed his optimism regarding the quarterly results, highlighting solid revenue and operating income growth amid an evolving market.
However, the North American market saw a 1% decline in volume sales during the quarter. Quincey noted that the downturn in the U.S. was influenced by weaker sales in away-from-home channels, which encompass products like water, sports drinks, coffee, tea, and soda. Nonetheless, this decline was somewhat countered by the performance of Fairlife milk and Coke, which ranked first and second in retail sales growth respectively.
To address the sales dip, Coca-Cola is collaborating with food chains to include its soda in combo meals. The company is reportedly working with McDonald’s to enhance the fast food chain’s $5 meal deal that features a soft drink.
Overall, Coca-Cola exceeded Wall Street expectations, reporting $12.4 billion in revenue for the second quarter, or about $0.84 per share, surpassing forecasts of $11.76 billion and approximately $0.81 per share. The company has now adjusted its forecast for organic revenue growth to between 9% and 10%, up from the previous estimate of 8% to 9%.
In a similar vein, Pepsi is facing challenges in engaging U.S. consumers, who are increasingly favoring 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 in previous years. Pepsi recently attributed its lackluster second quarter results to several product recalls.