Weight loss medications and non-alcoholic beverages are leading to decreased soda purchases among consumers in the U.S.
Despite these trends, Coca-Cola reported strong second-quarter earnings, supported by significant global demand for its beverages, leading the company to revise its full-year outlook upwards.
Coca-Cola’s CEO James Quincey expressed optimism about the company’s performance, highlighting solid growth in both revenue and operating income amid a changing market landscape.
However, in North America, the company experienced a 1% decline in volume sales during the quarter. Quincey noted that this decrease was affected by “softness in away-from-home channels,” which encompasses sales from water, sports drinks, coffee and tea, and soda.
This decline was somewhat balanced by the success of Fairlife milk and an increase in sales of Coca-Cola, which ranked first and second in retail sales growth for the quarter.
To counteract the sales drop, Coca-Cola is collaborating with restaurant chains to incorporate its sodas into combo meal options. Reports indicate that the company is working with McDonald’s to enhance the appeal of its $5 meal deal, which includes a soft drink.
Overall, Coca-Cola surpassed Wall Street expectations, reporting $12.4 billion in revenue, equating to about $0.84 per share. Analysts had anticipated revenues of around $11.76 billion, or approximately $0.81 per share.
The company has now adjusted its forecast for organic revenue growth to between 9% and 10%, an increase from its earlier estimate of 8% to 9%.
Similar to Coca-Cola, Pepsi is facing challenges in attracting U.S. consumers, who are increasingly favoring products linked to weight loss and healthier lifestyle choices. Additionally, a Gallup poll indicates that young adults in the U.S. are consuming less alcohol than before. In early July, Pepsi cited multiple recalls as a factor contributing to its lackluster performance in the second quarter.