Consumers in the U.S. are increasingly holding back on soda purchases due to the rise of weight loss medications and non-alcoholic beverage options.
Despite this trend, Coca-Cola reported strong earnings for the second quarter, attributed to robust global demand for its products. CEO James Quincey expressed optimism, stating that the company experienced solid growth in both revenue and operating income amid a changing market landscape.
However, North American volume sales saw a decline of 1% during the quarter. Quincey explained during an earnings call that the drop in the U.S. division was largely due to sluggish performance in away-from-home channels, which encompass water, sports drinks, coffee, tea, and sodas.
Coca-Cola noted that the decline was somewhat mitigated by the success of its Fairlife milk line and its flagship soda, Coca-Cola, which ranked first and second in retail sales growth respectively. To counter the decline, the company is collaborating with food chains to include its soda in combo meal offerings, with reports indicating a partnership with McDonald’s to enhance the fast food chain’s $5 meal deal.
Despite the volume drop, Coca-Cola exceeded Wall Street projections, reporting revenues of $12.4 billion and earnings of approximately $0.84 per share. Analysts had anticipated revenues of $11.76 billion and earnings of around $0.81 per share.
Looking forward, Coca-Cola has revised its forecast for organic revenue growth to between 9% and 10%, an increase from its earlier guidance of 8% to 9%.
Meanwhile, Pepsi has faced similar challenges in capturing the attention of U.S. consumers, who are increasingly focused on health-oriented products, including weight loss options. In early July, Pepsi attributed its lackluster second-quarter performance to a series of product recalls.