Weight loss medications and increased availability of non-alcoholic beverages are causing U.S. consumers to purchase fewer sodas.
Despite this trend, Coca-Cola reported strong earnings for the second quarter, attributed to high global demand for its beverage products. This prompted the company to raise its full-year revenue forecast.
Coca-Cola’s CEO, James Quincey, expressed optimism about the second-quarter results, stating that they demonstrated solid growth in both revenue and operating income amid shifting market conditions.
However, the company faced a 1% decline in volume sales in North America during the quarter. Quincey noted that this downturn was largely due to reduced sales in “away-from-home channels,” which include various beverage categories such as water, sports drinks, coffee, tea, and soda.
The decline was somewhat mitigated by sales of Fairlife milk and its flagship drink, Coca-Cola, which saw strong retail sales growth, ranking first and second in that category.
To address the volume drop, Coca-Cola is collaborating with food chains to include their sodas in combo meal deals. The beverage company is reportedly working with McDonald’s to enhance its $5 meal deal, which comes with a soft drink.
Coca-Cola exceeded Wall Street predictions, reporting $12.4 billion in revenue for the second quarter, translating to about $0.84 per share. Analysts had expected revenues of around $11.76 billion, or approximately $0.81 per share.
The company now anticipates organic revenue growth of 9% to 10%, revising its earlier estimate of 8% to 9%.
Pepsi is also facing challenges in attracting U.S. consumers, who are increasingly gravitating towards products that emphasize weight loss and healthier choices. A Gallup poll indicates that young adults are consuming significantly less alcohol than in previous years. In early July, Pepsi attributed its less-than-expected second quarter to a series of product recalls.