Weight loss medications and non-alcoholic alternatives have led to a slowdown in soda purchases among consumers in the United States.
Despite these challenges, Coca-Cola reported strong earnings for the second quarter, bolstered by robust global demand for its beverage products. The company’s performance prompted it to raise its full-year expectations.
Coca-Cola CEO James Quincey expressed optimism about the company’s results, highlighting significant growth in both revenue and operating income amid a shifting market landscape.
However, in North America, the company saw a 1% decline in volume sales during the quarter. Quincey noted that this decrease in its U.S. division was mainly due to “softness in away-from-home channels,” which includes products like water, sports drinks, coffee, tea, and soda.
To mitigate the sales decline, Coca-Cola found some relief from its Fairlife milk brand and its flagship soda, Coke, which performed well in retail sales growth.
Quincey announced that Coca-Cola is collaborating with restaurant chains to incorporate its sodas into combo meals. The company is specifically partnering with McDonald’s to enhance the value of its $5 meal deal, which includes a soft drink.
Coca-Cola’s second-quarter revenue reached $12.4 billion, exceeding Wall Street’s expectations of $11.76 billion. This translates to earnings of approximately $0.84 per share, surpassing the forecasted $0.81.
Looking ahead, Coca-Cola has adjusted its organic revenue growth forecast to between 9% and 10%, increasing it from the previous estimate of 8% to 9%.
In a similar vein, Pepsi has also faced difficulties in attracting U.S. consumers, who are shifting towards products that emphasize weight management and healthier lifestyles. Recent surveys indicate that young adults in the U.S. are consuming far less alcohol compared to previous years. Pepsi attributed its lackluster second-quarter performance to a series of product recalls.