Weight loss medications and the rise of non-alcoholic alternatives have led to a slowdown in soda purchases among consumers in the United States.
Despite this trend, Coca-Cola reported strong earnings for the second quarter, buoyed by robust global demand for its beverage offerings, which prompted the company to revise its full-year projections upward. CEO James Quincey expressed optimism about the results, highlighting solid growth in total revenue and operating income amid changing market conditions.
However, Coca-Cola experienced a 1% decline in volume sales in North America during the quarter. Quincey noted that this drop was primarily due to weaker sales 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 strong sales of Coca-Cola, which ranked first and second in retail sales growth for the period.
To counteract the volume decline, Coca-Cola is collaborating with food chains to include its products in combo meals, particularly working with McDonald’s to enhance its $5 meal deal that features a soft drink.
Overall, Coca-Cola exceeded Wall Street’s expectations, reporting revenue of $12.4 billion and earnings of approximately $0.84 per share, surpassing forecasts of $11.76 billion in revenue and about $0.81 per share.
The company now anticipates organic revenue growth between 9% and 10%, raising its earlier estimate of 8% to 9%.
Pepsi, like Coca-Cola, is also facing challenges in engaging U.S. consumers who are increasingly focused on weight loss and healthier lifestyle choices. A recent Gallup poll indicates that young adults are drinking significantly less alcohol than before. In early July, Pepsi cited several product recalls as a factor contributing to its lackluster performance in the second quarter.