The rising popularity of weight loss medications and non-alcoholic beverages is causing consumers in the U.S. to decrease their soda purchases.
Despite challenges, Coca-Cola reported strong earnings for the second quarter, attributed to high global demand for its beverages. The company’s CEO, James Quincey, expressed optimism, stating, “We are encouraged with our second-quarter results, which delivered solid topline and operating income growth in an ever-changing landscape.”
However, Coca-Cola experienced a 1% decline in volume sales in North America during the quarter. Quincey noted that this drop was mainly due to weakness in away-from-home channels, which encompass water, sports drinks, coffee, tea, and soda products. The decline was somewhat balanced by growth from Fairlife milk and Coke, which ranked first and second in retail sales growth for the quarter.
To counter the volume decline, Coca-Cola plans to collaborate with food chains to integrate its soda into combo meals. Reports indicate that the company is working with McDonald’s to enhance its $5 meal deal, which features a soft drink.
Overall, Coca-Cola exceeded Wall Street’s expectations, posting revenue of $12.4 billion for the second quarter, which translates to about $0.84 per share. Analysts had predicted revenue of $11.76 billion, approximately $0.81 per share.
The company has revised 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 is facing difficulties in capturing the attention of U.S. consumers, who are increasingly inclined to choose products focused on weight loss and healthier lifestyles. A recent Gallup poll indicates that young adults in the U.S. are consuming significantly less alcohol than before. Pepsi attributed its lackluster second-quarter performance to several product recalls.