Weight loss drugs and non-alcoholic alternatives are leading consumers in the U.S. to reduce their soda purchases.
Despite this trend, Coca-Cola reported strong second-quarter earnings, boosted by significant global demand for its beverage offerings, leading the company to raise its full-year outlook. CEO James Quincey expressed optimism about the results, noting solid growth in both revenue and operating income amid changing market conditions.
However, in North America, volume sales dipped 1% during the quarter. Quincey explained during the earnings call that this decrease was largely due to “softness in away-from-home channels,” which encompasses water, sports drinks, coffee and tea, as well as soda products.
To mitigate the impact of declining sales, Coca-Cola highlighted its Fairlife milk products along with its flagship soda, Coke, which ranked first and second in retail sales growth for the quarter. Quincey also mentioned that the company is collaborating with food chains to integrate its sodas into combo meal deals, specifically working with McDonald’s to enhance its $5 meal offering that includes a soft drink.
Coca-Cola exceeded Wall Street’s expectations with $12.4 billion in revenue for the second quarter, translating to about $0.84 per share. Analysts had projected revenues of $11.76 billion, or approximately $0.81 per share.
The company revised its forecast for organic revenue growth to a range of 9% to 10%, adjusting upwards from the earlier estimate of 8% to 9%.
Pepsi, like Coca-Cola, is facing challenges as U.S. consumers increasingly gravitate toward products focused on weight loss and healthier lifestyle choices. A Gallup poll indicated that younger adults in the U.S. are consuming significantly less alcohol than before. In early July, Pepsi attributed its lackluster second quarter to a series of product recalls.