Weight loss medications and non-alcoholic alternatives are causing consumers in the U.S. to reduce their soda purchases.
Despite this trend, Coca-Cola reported strong earnings for the second quarter, largely due to robust global demand for its beverages, leading the company to raise its full-year projections.
Coca-Cola’s CEO, James Quincey, expressed optimism in a statement, highlighting solid revenue and operating income growth amidst changing market dynamics.
However, in North America, Coca-Cola experienced a 1% decline in volume sales during the quarter. Quincey explained to investors that the drop in U.S. sales was attributed to “softness in away-from-home channels,” which encompasses water, sports drinks, coffee, tea, and soda products.
This decline was somewhat countered by the success of its Fairlife milk line and its flagship soda, Coke, which ranked first and second in retail sales growth for the quarter.
To address the sales drop, Quincey noted that Coca-Cola is collaborating with food chains to incorporate its soda into combo meals. The company is reportedly teaming up with McDonald’s to enhance its $5 meal deal, which includes a soft drink.
Overall, Coca-Cola exceeded Wall Street’s expectations, reporting $12.4 billion in revenue, translating to about $0.84 per share. Analysts had anticipated revenue of $11.76 billion, or roughly $0.81 per share.
The company also revised its forecast for organic revenue growth, now predicting an increase of 9% to 10%, up from the earlier estimate of 8% to 9%.
Similarly, Pepsi has faced challenges in engaging U.S. consumers, who are increasingly favoring products that focus on weight loss and healthier lifestyles. A recent Gallup poll indicates that young adults in the U.S. are consuming significantly less alcohol than in the past. In July, Pepsi attributed its lackluster second quarter to a series of product recalls.