Weight loss medications and non-alcoholic beverages are leading U.S. consumers to reduce their soda purchases. Despite this trend, Coca-Cola has announced strong earnings for the second quarter, fueled by robust global demand for its beverages, which has led the company to raise its full-year forecasts.
Coca-Cola’s CEO, James Quincey, expressed optimism about the second-quarter results, noting significant growth in both top-line revenue and operating income amid a shifting market landscape.
However, the company reported a 1% decline in volume sales in North America for the quarter. Quincey attributed this decrease to reduced sales in away-from-home channels, which encompass products like water, sports drinks, coffee, tea, and soda.
This decline was somewhat mitigated by growth in sales of Fairlife milk and Coke itself, which ranked first and second in retail sales growth during the quarter.
To counteract the decrease in soda sales, Coca-Cola is collaborating with food chains to integrate its products into combo meals. Notably, it is reportedly working with McDonald’s to enhance the fast-food chain’s $5 meal deal, which includes a soft drink.
Despite the challenges, Coca-Cola surpassed Wall Street’s expectations, reporting $12.4 billion in revenue for the quarter, translating to approximately $0.84 per share. Analysts had predicted revenue of $11.76 billion, or roughly $0.81 per share, according to FactSet.
The company has now revised its forecast for organic revenue growth to between 9% and 10%, an increase from its earlier projection of 8% to 9%.
Meanwhile, Pepsi is facing similar challenges in attracting U.S. consumers, who are showing a growing preference for healthier options and weight loss-focused products. Recent polling indicates that young adults in the U.S. are consuming significantly less alcohol than in the past, further impacting soda sales. In early July, Pepsi attributed its lackluster second-quarter performance to a series of product recalls.