Weight loss medications and non-alcoholic alternatives have led to a decrease in soda purchases among consumers in the U.S.
Despite this trend, Coca-Cola reported strong second-quarter earnings, largely supported by high global demand for its products, which prompted the company to raise its full-year forecasts. CEO James Quincey commented on the company’s performance, expressing optimism about their results amidst changing market conditions.
However, Coca-Cola experienced a 1% decline in volume sales within North America during the quarter. Quincey attributed this drop to a decrease in sales from “away-from-home channels,” which encompasses their offerings in water, sports drinks, coffee, tea, and soda products. The decline was somewhat mitigated by the success of Fairlife milk and strong sales of Coca-Cola itself, which ranked first and second in retail growth for the quarter.
To counteract the decline, Coca-Cola is collaborating with fast food chains to incorporate its beverages into combo meal deals. Reports indicate that the company is working with McDonald’s to enhance its $5 meal offering, which includes a soft drink.
Overall, Coca-Cola exceeded Wall Street expectations with reported revenues of $12.4 billion for the second quarter, equating to approximately $0.84 per share. Analysts had predicted revenues of around $11.76 billion and earnings of roughly $0.81 per share, according to FactSet.
The company has updated its forecast for organic revenue growth to a range of 9% to 10%, an increase from its earlier estimate of 8% to 9%.
Similarly, Pepsi has struggled to engage U.S. consumers, who are increasingly opting for healthier products that support weight loss and promote healthier lifestyles. A Gallup poll indicates that young adults in the U.S. are consuming significantly less alcohol than before. At the beginning of July, Pepsi attributed its subdued second-quarter performance to a series of product recalls.