Weight loss medications and a rise in non-alcoholic beverage choices are leading consumers in the U.S. to reduce their soda purchases.
Despite this trend, Coca-Cola revealed strong earnings for the second quarter on Tuesday, supported by robust global demand for its beverages. As a result, the company has increased its full-year financial outlook.
Coca-Cola CEO James Quincey expressed optimism regarding the quarterly results, noting that the company achieved significant growth in both revenue and operating income in a rapidly changing market.
However, the company did experience a 1% decline in volume sales in North America during the same period. Quincey attributed this downturn to lower sales in “away-from-home channels,” which include water, sports drinks, coffee, tea, and soda products.
This decline was somewhat mitigated by the popularity of Fairlife milk and Coca-Cola itself, which ranked first and second in retail sales growth for the quarter.
To counteract the decrease in sales, Quincey mentioned that Coca-Cola is collaborating with food chains to incorporate its sodas into combo meals. The company is reportedly working with McDonald’s to enhance the chain’s $5 meal deal, which includes a soft drink.
Coca-Cola still managed to surpass Wall Street’s expectations. The company reported $12.4 billion in revenue for the second quarter, translating to about $0.84 per share, while analysts had predicted revenues of approximately $11.76 billion, or around $0.81 per share, according to FactSet.
Looking ahead, Coca-Cola has revised its forecast for organic revenue growth to between 9% and 10%, up from an earlier estimate of 8% to 9%.
Similar to Coca-Cola, Pepsi is facing challenges in engaging U.S. consumers, who are increasingly leaning towards products that emphasize weight loss and healthier choices. In early July, Pepsi attributed its less-than-stellar second-quarter performance to a series of product recalls.