Weight loss medications and non-alcoholic alternatives are leading U.S. consumers to limit their soda purchases. Despite this trend, Coca-Cola reported strong second-quarter earnings, buoyed by high demand for its beverages, and has raised its full-year outlook.
Coca-Cola’s CEO, James Quincey, expressed satisfaction with the company’s performance, highlighting solid growth in revenue and operating income amidst a shifting market landscape.
However, there was a 1% drop in volume sales in North America during the quarter, attributed to weaker performance in away-from-home channels, including water, sports drinks, coffee, tea, and soda. Quincey noted that the decline in the U.S. sector was somewhat countered by growth in Fairlife milk and Coca-Cola soda, which ranked first and second in retail sales growth, respectively.
To address the downturn, Coca-Cola is collaborating with restaurants to integrate its soda into meal combos, working closely with McDonald’s to enhance the $5 meal deal that comes with a soft drink.
Overall, Coca-Cola surpassed Wall Street’s expectations with Q2 revenues of $12.4 billion, translating to about $0.84 per share. Analysts had predicted revenue of $11.76 billion, or approximately $0.81 per share.
The company has adjusted its forecast for organic revenue growth to between 9% and 10%, raising its earlier estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in attracting American consumers who are increasingly focusing on weight loss and health-conscious choices. A Gallup poll indicates that young adults in the U.S. are consuming significantly less alcohol than before. In early July, Pepsi attributed its lackluster second-quarter performance to several product recalls.