Weight loss medications and a shift towards non-alcoholic beverages are leading U.S. consumers to rethink their soda purchases.
Despite this trend, Coca-Cola shared impressive second-quarter results on Tuesday, underscored by strong global demand for its products. This success has prompted the beverage titan to increase its overall financial outlook for the year.
Coca-Cola’s CEO, James Quincey, stated, “We are encouraged with our second-quarter results, which delivered solid topline and operating income growth in an ever-changing landscape.”
However, the company reported a 1% drop in volume sales in North America during the quarter. Quincey attributed this decline to reduced performance in away-from-home consumption channels, encompassing water, sports drinks, coffee, tea, and soda offerings.
The downturn in some areas was partially countered by its Fairlife milk brand and its flagship soda, Coca-Cola, which both achieved notable retail sales growth.
To address the sales decline, Quincey mentioned that Coca-Cola is collaborating with food chains to integrate their sodas into combo meal offers. The company is reportedly working with McDonald’s to enhance the fast food chain’s $5 meal deal that includes a beverage.
Overall, Coca-Cola exceeded Wall Street’s forecasts, reporting $12.4 billion in revenue for the second quarter, translating to about $0.84 per share. Analysts had anticipated the company would generate approximately $11.76 billion in revenue, about $0.81 per share, according to FactSet.
The company has revised its expectations for organic revenue growth, now predicting an increase of 9% to 10%, up from its earlier forecast of 8% to 9%.
Similarly, Pepsi is facing challenges attracting U.S. consumers, who are increasingly leaning toward products that align with weight loss and healthier lifestyles. A recent Gallup poll indicated that young adults in the U.S. are consuming less alcohol than in previous years. In early July, Pepsi cited several product recalls as contributing factors to its lackluster second-quarter performance.