Weight loss medications and a trend toward non-alcoholic beverages are causing U.S. consumers to hold back on soda purchases.
Despite this, Coca-Cola reported strong second-quarter earnings on Tuesday, benefiting from strong global demand for its products, which led the company to raise its full-year forecasts.
James Quincey, CEO of Coca-Cola, expressed optimism about the company’s second-quarter results, noting significant revenue and operating income growth in a fluctuating market.
However, Coca-Cola experienced a 1% decline in volume sales in North America during the same period. Quincey indicated that this drop for the U.S. division was partly due to reduced demand for its products sold outside the home, including its offerings in water, sports drinks, coffee, tea, and soda.
This decline was somewhat mitigated by successes in its Fairlife milk brand and its flagship soda, Coca-Cola, which ranked first and second in retail sales growth for the quarter.
To combat this volume decline, Coca-Cola is collaborating with restaurant chains to incorporate its soda into combo meals. Reports suggest the company is partnering with McDonald’s to enhance its $5 meal deal, which includes a soft drink.
Coca-Cola exceeded Wall Street forecasts with a reported revenue of $12.4 billion for the second quarter, translating to about $0.84 per share. Analysts had anticipated revenue of $11.76 billion, or approximately $0.81 per share, according to FactSet.
Looking ahead, the firm now expects organic revenue growth to fall between 9% and 10%, an increase from its earlier projection of 8% to 9%.
Similar to Coca-Cola, Pepsi is facing challenges in attracting U.S. consumers, who are increasingly interested in weight-loss-focused products and healthier lifestyle choices. A Gallup poll highlights a significant reduction in alcohol consumption among young adults in the United States. Earlier this month, Pepsi attributed its lackluster second-quarter performance to a series of product recalls.