Weight loss medications and a rise in non-alcoholic beverage choices are causing U.S. consumers to hesitate in purchasing sodas.
Despite these trends, Coca-Cola reported strong second-quarter earnings, largely fueled by robust global demand for its beverages, which led the company to raise its annual forecasts. CEO James Quincey expressed optimism about the results, stating that the company saw solid growth in both revenue and operating income in a dynamic market.
However, Coca-Cola experienced a 1% decline in volume sales in North America during the quarter. Quincey indicated that this decline was mainly due to reduced activity in away-from-home channels, which include water, sports drinks, coffee, tea, and soda products.
This dip was somewhat counterbalanced by successful sales in its Fairlife milk brand and the top-selling soda, Coke, which ranked first and second in retail sales growth, respectively.
To address the sales drop, Quincey mentioned efforts to collaborate with food chains to include Coca-Cola products in combo meals. The company is reportedly partnering with McDonald’s to enhance the fast-food chain’s $5 meal deal, which includes a soft drink.
Coca-Cola’s performance surpassed Wall Street predictions, reporting $12.4 billion in revenue, equating to approximately $0.84 per share. Analysts had anticipated revenue of $11.76 billion or around $0.81 per share.
Looking ahead, the company has adjusted its forecast for organic revenue growth to between 9% and 10%, up from a previous estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in attracting U.S. consumers, who are increasingly leaning towards products that support weight loss and healthier lifestyles. A Gallup poll indicates that young adults in the U.S. are consuming significantly less alcohol than in previous years. In early July, Pepsi attributed its lackluster second-quarter results to a string of product recalls.