Weight loss medications and a rise in non-alcoholic beverage options are causing consumers in the U.S. to hesitate in purchasing sodas.
Despite this trend, Coca-Cola reported strong second-quarter earnings, benefiting from a robust global demand for its beverages and prompting the company to revise its full-year expectations upward.
Coca-Cola’s CEO, James Quincey, expressed optimism about the results, stating that the company experienced solid growth in both revenue and operating income amid a dynamic market environment.
However, in North America, the company saw a 1% decline in volume sales for the quarter. Quincey noted that this drop was largely attributed to weaker performance in “away-from-home channels,” which encompasses its water, sports drinks, coffee, tea, and soda products.
The decline in volume was somewhat mitigated by strong sales of Fairlife milk and Coca-Cola itself, which ranked highly in retail sales growth.
To address the sales slump, Quincey mentioned that Coca-Cola is collaborating with food chains to incorporate their soda into combo meal offerings, including a partnership with McDonald’s to enhance its $5 meal deal that features a soft drink.
Overall, Coca-Cola exceeded Wall Street projections, reporting second-quarter revenues of $12.4 billion and earnings of roughly $0.84 per share, surpassing expectations of $11.76 billion in revenue and $0.81 per share.
The company has now increased its forecast for organic revenue growth to between 9% and 10%, up from its previous estimate of 8% to 9%.
Pepsi has also faced challenges in retaining the interest of U.S. consumers, who are shifting toward products that emphasize weight loss and healthier options. Additionally, a series of product recalls in early July contributed to Pepsi’s subdued performance in the second quarter.