Weight loss medications and a rise in non-alcoholic beverage options have led consumers in the U.S. to reduce their soda purchases.
Despite these trends, Coca-Cola reported strong earnings for the second quarter on Tuesday, supported by solid global demand for its beverage products, which prompted the company to increase its full-year projections.
Coca-Cola CEO James Quincey remarked, “We are encouraged with our second-quarter results, which delivered solid topline and operating income growth in an ever-changing landscape.”
However, the company’s volume sales in North America dipped by 1% during the quarter. Quincey explained to investors in an earnings call that this decline stemmed from “softness in away-from-home channels,” which encompasses water, sports drinks, coffee, tea, and soda.
This decrease was somewhat mitigated by the performance of Fairlife milk and the brand’s flagship soda, Coca-Cola, which ranked first and second in retail sales growth for the quarter.
To combat this decline, Coca-Cola is collaborating with food chains to incorporate its soda into combo meals. Reports indicate that the company is working with McDonald’s to enhance the fast food chain’s $5 meal deal, which includes a soft drink.
Overall, Coca-Cola’s performance exceeded Wall Street expectations, reporting $12.4 billion in revenue for the second quarter, or around $0.84 per share. Analysts had predicted an $11.76 billion revenue, roughly $0.81 per share, according to FactSet.
The company has now adjusted its forecast for organic revenue growth to a range of 9% to 10%, up from the previous estimate of 8% to 9%.
Similarly, Pepsi is navigating challenges in attracting U.S. consumers, who are increasingly favoring products linked to weight management and healthier lifestyles. A recent Gallup poll highlighted that young adults in the U.S. are consuming significantly less alcohol than before. In early July, Pepsi attributed its lackluster second-quarter performance to a series of product recalls.