Weight loss medications and non-alcoholic alternatives are leading American consumers to reduce their soda purchases.
Despite these trends, Coca-Cola reported strong second-quarter earnings, buoyed by high global demand for its beverages, which prompted the company to raise its full-year outlook.
Coca-Cola’s CEO, James Quincey, expressed optimism about the results, highlighting solid growth in both revenue and operating income amidst an evolving market.
However, in North America, Coca-Cola experienced a 1% decline in volume sales during the quarter. Quincey noted that this drop in its U.S. division was largely due to reduced sales in away-from-home venues, which encompass its water, sports drinks, coffee, tea, and soda products.
The decline was somewhat mitigated by the company’s Fairlife milk brand and its flagship soda, Coke, which achieved high retail sales growth.
In response to the declining sales, Quincey mentioned that Coca-Cola is collaborating with fast-food chains to include its sodas in combo meals. The beverage giant is reportedly working with McDonald’s to enhance the $5 meal deal that comes with a soft drink.
Overall, Coca-Cola surpassed Wall Street’s expectations, posting $12.4 billion in revenue for the second quarter, which translates to approximately $0.84 per share. Analysts had anticipated revenue of $11.76 billion or about $0.81 per share.
The company has now adjusted its forecast for organic revenue growth to between 9% and 10%, revising its earlier prediction of 8% to 9%.
Similarly, Pepsi is facing challenges in engaging U.S. consumers, who are increasingly inclined towards weight loss and healthier options. A recent Gallup poll indicates that young adults in the U.S. are consuming significantly less alcohol than in the past. In early July, Pepsi attributed its subdued second-quarter performance to a series of product recalls.