Consumers in the U.S. are increasingly opting for weight loss medications and non-alcoholic beverages, which is affecting soda sales.
Despite this trend, Coca-Cola announced strong second-quarter earnings, fueled by solid global demand for its products. This has led the company to revise its full-year outlook upward.
Coca-Cola CEO James Quincey expressed optimism about the company’s performance, noting significant growth in both revenue and operating income amidst a shifting market. However, in North America, the company experienced a 1% decline in volume sales during the quarter. Quincey attributed this dip to reduced sales in away-from-home channels, which include water, sports drinks, coffee, tea, and sodas.
While the overall volume decreased, Coca-Cola’s Fairlife milk and its flagship soda, Coke, posted strong retail sales growth. To counteract the decline in sales, the company is collaborating with restaurant chains to include its sodas in combo meals. Reports suggest Coca-Cola is working with McDonald’s to enhance the appeal of its $5 meal deal, which comes with a soft drink.
Coca-Cola’s performance exceeded analyst expectations for the second quarter, reporting revenues of $12.4 billion, or $0.84 per share, compared to forecasts of $11.76 billion and $0.81 per share. The company has now raised its forecast for organic revenue growth to between 9% and 10%, up from the previous estimate of 8% to 9%.
Pepsi, similarly, is facing challenges in attracting U.S. consumers who are leaning towards healthier lifestyles and weight loss products. Recent statistics from a Gallup poll indicate that young adults in the U.S. are consuming less alcohol than in the past. In early July, Pepsi cited a series of product recalls as a reason for its lackluster performance in the second quarter.