Weight loss medications and a rise in non-alcoholic drink options are causing American consumers to delay their purchases of sodas.
Despite these trends, Coca-Cola reported strong earnings for the second quarter, fueled by robust global demand for its beverages, and has increased its full-year guidance. CEO James Quincey expressed optimism about the company’s performance, noting solid revenue and operating income growth during a challenging market environment.
However, in North America, Coca-Cola experienced a 1% decline in volume sales for the quarter. Quincey attributed this decrease to weaker performance in “away-from-home channels,” which encompass water, sports drinks, coffee, tea, and soda products. The decline was partially mitigated by the company’s Fairlife milk line and its flagship Coke beverage, which ranked first and second in retail sales growth, respectively.
To counteract the volume drop, Quincey mentioned that Coca-Cola is partnering with food chains to incorporate its soda into combo meals. Discussions with McDonald’s are reportedly underway to enhance the fast-food chain’s $5 meal deal that includes a soft drink.
Overall, Coca-Cola exceeded Wall Street’s expectations, recording $12.4 billion in revenue for the second quarter, translating to approximately $0.84 per share. Analysts had predicted revenue of $11.76 billion, or roughly $0.81 per share.
The company now projects organic revenue growth of 9% to 10%, raising its previous forecast of 8% to 9%.
Similarly, Pepsi is facing challenges in attracting U.S. consumers, who are increasingly leaning towards healthier products that support weight loss. A Gallup poll found that young adults in the U.S. are consuming significantly less alcohol than in the past. Earlier in July, Pepsi cited a series of product recalls as a contributing factor to its lackluster performance in the second quarter.