Consumer interest in weight loss medications and non-alcoholic beverages is leading to declining soda sales in the U.S. market. Despite this trend, Coca-Cola reported strong earnings for the second quarter, thanks in part to robust global demand for its products, which has prompted the company to raise its full-year revenue projections.
Coca-Cola’s CEO, James Quincey, expressed optimism about the company’s results, highlighting solid growth in revenue and operating income amidst a changing market landscape. Nonetheless, in North America, the company experienced a 1% decrease in volume sales during the quarter. Quincey attributed this decline to reduced sales in “away-from-home channels,” which encompass water, sports drinks, coffee, tea, and soda.
This drop was somewhat mitigated by strong performance in Fairlife milk and its flagship product, Coca-Cola, which ranked first and second in retail sales growth during the quarter. To counter the volume decline, Coca-Cola is collaborating with restaurant chains to integrate its beverages into combo meals, including a partnership with McDonald’s to enhance its $5 meal deal.
Coca-Cola’s second-quarter revenue reached $12.4 billion, amounting to approximately $0.84 per share, surpassing analysts’ expectations of $11.76 billion in revenue and $0.81 per share earnings, according to FactSet. Following this performance, the company has adjusted its forecast for organic revenue growth to between 9% and 10%, an increase from its earlier estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in attracting U.S. consumers who are increasingly focused on health and weight loss. A recent Gallup poll indicates a significant decline in alcohol consumption among young adults in the U.S. In July, Pepsi attributed its lackluster second-quarter results to several product recalls.