Demand for weight loss drugs and non-alcoholic alternatives is causing U.S. consumers to purchase fewer sodas.
Despite this trend, Coca-Cola reported strong earnings for the second quarter, benefiting from solid global demand for its beverages. The company has raised its full-year expectations as a result.
Coca-Cola CEO James Quincey expressed optimism regarding the company’s performance, noting its significant growth in both revenue and operating income amidst a shifting market landscape.
In North America, however, Coca-Cola experienced a 1% decline in volume sales during the quarter. Quincey attributed this decrease to weaker performance in away-from-home channels, which encompass water, sports drinks, coffee, tea, and soda.
The decline was somewhat mitigated by the popularity of Fairlife milk and the Coca-Cola brand itself, which ranked first and second in retail sales growth, respectively.
To counteract the downturn, Coca-Cola plans to partner with food chains to integrate their sodas into combo meals. Collaborations with McDonald’s are reportedly underway to enhance the fast-food chain’s $5 meal deal, which includes a soft drink.
Overall, Coca-Cola surpassed Wall Street predictions, reporting $12.4 billion in revenue for the second quarter, amounting to approximately $0.84 per share. Analysts had anticipated revenue of $11.76 billion, or about $0.81 per share.
The company now projects organic revenue growth of 9% to 10%, an increase from its earlier forecast of 8% to 9%.
In a similar vein, Pepsi is facing challenges in capturing the interest of U.S. consumers who are increasingly leaning towards weight loss and healthier lifestyle choices. A Gallup poll indicates that younger adults in the U.S. are consuming significantly less alcohol than before. In early July, Pepsi cited a series of product recalls as a contributing factor to its weaker performance in the second quarter.