Weight loss medications and an increase in non-alcoholic beverage options are causing consumers in the U.S. to buy fewer sodas. Despite this trend, Coca-Cola reported strong second-quarter earnings on Tuesday, driven by robust global demand, which led the company to raise its full-year forecast.
James Quincey, CEO of Coca-Cola, expressed optimism about the quarter’s results, which demonstrated significant revenue and operating income growth in a dynamic market.
However, Coca-Cola experienced a 1% decline in volume sales in North America during the quarter. Quincey explained that the decrease for the U.S. division was largely due to reduced sales in “away-from-home channels,” which encompass water, sports drinks, coffee, tea, and sodas.
To mitigate this decline, Coca-Cola’s Fairlife milk products and its flagship soda, Coca-Cola, performed well, ranking first and second in retail sales growth for the quarter.
To address falling sales, Quincey mentioned that Coca-Cola is collaborating with restaurant chains to integrate their sodas into combo meal offerings. The company is reportedly working with McDonald’s to enhance its $5 meal deal that includes a soft drink.
Coca-Cola surpassed Wall Street’s expectations, reporting revenue of $12.4 billion and earnings of $0.84 per share. Analysts had anticipated revenue of $11.76 billion, or about $0.81 per share.
The company is now projecting organic revenue growth between 9% and 10%, an increase from its earlier forecast of 8% to 9%.
In a similar vein, Pepsi is also facing challenges in capturing the interest of U.S. consumers, who are increasingly opting for weight-loss-oriented and healthier products. A recent Gallup poll highlights that young adults in the U.S. are drinking significantly less alcohol than in the past. In early July, Pepsi attributed its lackluster second-quarter performance to a series of product recalls.