Weight loss medications and non-alcoholic alternatives are causing consumers in the U.S. to reduce their soda purchases. Despite this trend, Coca-Cola announced strong second-quarter earnings, largely due to significant global demand for its beverages, which led to an increase in its full-year forecasts.
Coca-Cola CEO James Quincey expressed optimism about the company’s second-quarter performance, highlighting growth in both revenue and operating income amidst a shifting market landscape.
However, the company faced a 1% decline in volume sales in North America during this quarter. Quincey attributed this decrease to a weakening in “away-from-home channels,” which encompass products such as water, sports drinks, coffee, tea, and sodas.
Coca-Cola noted that this decline was somewhat mitigated by the success of its Fairlife milk and its flagship soda, Coke, which ranked first and second in retail sales growth for the quarter.
To counter the sales drop, Quincey mentioned that Coca-Cola is collaborating with fast food chains to integrate its sodas into combo meals. The company is reportedly working with McDonald’s to enhance its $5 meal deal, which includes a soft drink.
Overall, Coca-Cola exceeded Wall Street’s expectations, reporting $12.4 billion in revenue for the second quarter, equating to approximately $0.84 per share, surpassing the anticipated revenue of $11.76 billion at around $0.81 per share.
The company has also revised its forecast for organic revenue growth, projecting an increase between 9% and 10%, up from an earlier estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in engaging U.S. consumers, who are increasingly favoring products focused on weight loss and healthier living. A Gallup poll indicates a significant decline in alcohol consumption among young adults in the U.S. Earlier this month, Pepsi attributed its lackluster second-quarter results to a series of product recalls.