Weight loss medications and the rise in non-alcoholic beverage options are causing U.S. consumers to reduce their soda purchases.
Despite these trends, Coca-Cola announced impressive earnings for the second quarter on Tuesday, thanks in part to strong global demand for its beverage offerings. This positive performance has led the company to increase its full-year guidance.
Coca-Cola CEO James Quincey expressed optimism about the company’s performance, noting, “We are encouraged with our second-quarter results, which delivered solid topline and operating income growth in an ever-changing landscape.”
In North America, however, the company reported a 1% decline in volume sales during the quarter. Quincey explained in an earnings call that the reduction in the U.S. market was largely due to decreased sales in “away-from-home channels,” which encompass products like water, sports drinks, coffee, tea, and sodas.
This volume drop was partially mitigated by the success of Fairlife milk and Coke being the leader in retail sales growth for the quarter. To counteract the decline further, Quincey indicated that Coca-Cola is collaborating with restaurant chains to include its sodas in combo meals, specifically mentioning efforts with McDonald’s to enhance its $5 meal deal, which comes with a soft drink.
Overall, Coca-Cola surpassed Wall Street’s predictions, reporting $12.4 billion in revenue for the second quarter, which translates to approximately $0.84 per share. Analysts had expected the company to generate $11.76 billion, or around $0.81 per share, according to FactSet.
The company has also raised its forecast for organic revenue growth, now projecting an increase between 9% and 10%, as opposed to its previous estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in attracting U.S. consumers, who are increasingly favoring products that focus on weight loss and healthier lifestyles. A Gallup poll indicates that young adults in the U.S. are consuming significantly less alcohol than before. In early July, Pepsi cited a series of product recalls as factors contributing to its lackluster second-quarter performance.