Weight loss medications and non-alcoholic beverages are leading U.S. consumers to reconsider their soda purchases, impacting soft drink sales.
In the midst of these trends, Coca-Cola reported strong second-quarter earnings, which were buoyed by a significant global demand for its products, prompting the company to upgrade its full-year forecasts.
James Quincey, CEO of Coca-Cola, expressed optimism about the company’s financial performance, noting, “We are encouraged with our second-quarter results, which delivered solid topline and operating income growth in an ever-changing landscape.”
Despite the positive overall results, Coca-Cola experienced a 1% drop in volume sales within North America during the quarter. Quincey attributed this decline in the U.S. market to “softness in away-from-home channels,” affecting its water, sports drinks, coffee, tea, and soda segments.
This decline in volume was somewhat offset by the success of the Fairlife milk brand and strong sales of the Coca-Cola beverage, which ranked first and second in retail sales growth, respectively.
To counter the declining sales trend, Quincey indicated that Coca-Cola is collaborating with food chains to integrate its sodas into combo meal options. The company is reportedly working with McDonald’s to enhance the fast-food giant’s $5 meal deal that includes a soft drink.
Coca-Cola exceeded Wall Street’s expectations for the quarter, posting revenues of $12.4 billion, or approximately $0.84 per share, surpassing predictions of $11.76 billion and about $0.81 per share from analysts at FactSet.
The company has also updated its forecast for organic revenue growth to a range of 9% to 10%, an increase from the previous estimate of 8% to 9%.
Similarly, Pepsi has been facing challenges in attracting U.S. consumers, who are shifting towards products focused on weight loss and healthier lifestyles. Recent trends show that young adults in the U.S. are significantly reducing their alcohol consumption, as reported by a Gallup poll. In early July, Pepsi attributed its lackluster second-quarter performance to a series of product recalls.