Weight loss drugs and non-alcoholic alternatives are causing a significant shift in consumer habits, leading to a decrease in soda purchases, particularly in the United States.
Despite facing challenges, Coca-Cola reported strong second-quarter earnings, largely driven by robust global demand for its beverage offerings. This performance prompted the company to raise its full-year revenue projections.
Coca-Cola CEO James Quincey expressed optimism about the second-quarter results, highlighting solid growth in both revenue and operating income amidst a shifting market landscape.
However, volume sales in North America dipped by 1% during the quarter. Quincey attributed the decline in the U.S. division to “softness in away-from-home channels,” which encompass water, sports drinks, coffee and tea, as well as soda products.
The decline in soda sales was somewhat mitigated by the success of Fairlife milk and Coca-Cola’s own soda, which ranked first and second in retail sales growth for the quarter.
To address the sales downturn, Quincey noted that Coca-Cola is collaborating with restaurant chains to incorporate its soda into combo meal offerings. Reports indicate the company is working with McDonald’s to enhance the fast food chain’s $5 meal deal that includes a soft drink.
Overall, Coca-Cola exceeded Wall Street’s expectations, reporting $12.4 billion in revenue for the second quarter, equating to approximately $0.84 per share. Analysts had estimated revenue of $11.76 billion, or roughly $0.81 per share, according to FactSet.
The company has also revised its forecast for organic revenue growth to between 9% and 10%, an increase from the previous estimate of 8% to 9%.
Similar to Coca-Cola, Pepsi is facing difficulties in attracting U.S. consumers, who are increasingly focused on health-conscious products and weight loss options. A Gallup poll indicates that young adults in the U.S. are consuming significantly less alcohol than before. Additionally, Pepsi attributed its lackluster second quarter to a series of product recalls.