Weight loss medications and the rising popularity of non-alcoholic beverages have led U.S. consumers to reduce their soda purchases.
Despite this trend, Coca-Cola reported strong earnings for the second quarter on Tuesday, bolstered by solid global demand for its products. As a result, the company raised its full-year financial projections.
“We are pleased with our second-quarter performance, which showed notable growth in both revenue and operating income amidst a dynamic market,” stated Coca-Cola CEO James Quincey.
However, the company saw a 1% decline in volume sales in North America during the quarter. Quincey attributed this drop to a decrease in sales through “away-from-home channels,” which encompass water, sports drinks, coffee, tea, and sodas.
Coca-Cola mentioned that the decline was somewhat mitigated by its Fairlife milk brand and its flagship soda, Coca-Cola, which ranked first and second respectively in terms of retail sales growth in the quarter.
To counteract the dip in sales, Quincey indicated that Coca-Cola is collaborating with fast-food chains to integrate its sodas into combo meal options. Reports suggest that the company is working alongside McDonald’s to enhance the fast-food chain’s $5 meal deal, which includes a soft drink.
Overall, Coca-Cola outperformed Wall Street expectations, reporting $12.4 billion in revenue, equating to about $0.84 per share. Analysts had anticipated revenue of $11.76 billion, or roughly $0.81 per share, according to FactSet.
The company has now adjusted its forecast for organic revenue growth to between 9% and 10%, a revision from its earlier estimate of 8% to 9%.
In a similar vein, Pepsi has faced challenges in capturing the attention of American consumers, who are increasingly opting for products aimed at weight loss and healthier lifestyles. A recent Gallup poll indicated that young adults in the U.S. are consuming significantly less alcohol than before. Earlier this month, Pepsi cited a series of product recalls as a factor contributing to its subdued performance in the second quarter.