Weight loss medications and non-alcoholic alternatives are causing U.S. consumers to postpone purchases of sodas.
Despite this trend, Coca-Cola reported strong earnings for the second quarter, driven by robust global demand, leading the company to raise its full-year outlook. CEO James Quincey expressed optimism regarding the quarterly results, highlighting solid growth in revenue and operating income amid a fluctuating market.
However, Coca-Cola experienced a 1% decline in volume sales in North America during the quarter. Quincey attributed this dip to a decrease in sales in channels where consumers are away from home, which includes categories like water, sports drinks, coffee, tea, and soda.
The decline was somewhat mitigated by strong performances from its Fairlife milk line and its namesake soda, Coke, which ranked first and second in retail sales growth over the quarter. To address the volume drop, Coca-Cola is collaborating with food chains to integrate its sodas into combo meals, including a partnership with McDonald’s aimed at enhancing the fast-food chain’s $5 meal deal.
Overall, Coca-Cola surpassed Wall Street expectations, reporting revenues of $12.4 billion for the second quarter, equating to approximately $0.84 per share. Analysts had projected revenues of $11.76 billion at around $0.81 per share, according to FactSet.
The company now anticipates organic revenue growth of 9% to 10%, raising its earlier estimate of 8% to 9%.
Pepsi is facing similar challenges in attracting U.S. consumers, who are increasingly 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 before. Earlier in July, Pepsi attributed its lackluster second-quarter performance to a series of product recalls.