Shifted consumer preferences towards weight loss medications and non-alcoholic beverages are causing a decline in soda purchases in the United States.
Despite this trend, Coca-Cola reported strong earnings for the second quarter, driven by global demand for its beverages, leading the company to increase its full-year revenue projection. CEO James Quincey expressed optimism about the results, noting solid growth in both revenue and operating income amidst a changing market landscape.
In North America, however, Coca-Cola experienced a 1% decline in volume sales during the quarter. Quincey explained that the downturn was primarily influenced by weaker sales in “away-from-home channels,” affecting products such as water, sports drinks, coffee, tea, and soda. The decline in volume was offset to some extent by the popularity of Fairlife milk and Coca-Cola itself, which ranked first and second in retail sales growth for the quarter.
To address the sales drop, Coca-Cola is collaborating with food chains to incorporate its soda into combo meals. Reports indicate that the company is partnering with McDonald’s to enhance the fast-food chain’s $5 meal deal, which includes a soft drink.
Coca-Cola’s performance exceeded Wall Street estimates, with second-quarter revenue reaching $12.4 billion, translating to earnings of $0.84 per share. Analysts had predicted revenues of $11.76 billion, approximately $0.81 per share.
Furthermore, the company has raised its forecast for organic revenue growth to a range of 9% to 10%, up from the previous estimate of 8% to 9%.
Similarly, Pepsi has faced challenges in capturing the U.S. consumer market, with a growing trend towards healthier lifestyles and weight loss products. In early July, Pepsi attributed its lackluster second-quarter performance to a series of product recalls.