Weight loss medications and non-alcoholic alternatives are causing a decrease in soda consumption among American consumers.
Despite these trends, Coca-Cola reported strong earnings for the second quarter, reflecting significant global demand for its beverage lineup, which led the company to increase its full-year forecast. CEO James Quincey expressed optimism about the results, noting solid growth in revenue and operating income amid a shifting market landscape.
In North America, however, Coca-Cola experienced a 1% decline in volume sales during the quarter. Quincey attributed this dip to weaker performance in away-from-home categories, which include water, sports drinks, coffee and tea, as well as traditional soda products. The decline was somewhat mitigated by the success of its Fairlife milk and its flagship soda, Coke, which ranked first and second in retail sales growth for the period.
To counteract the volume drop, Coca-Cola is collaborating with food chains to integrate its beverages into meal deals. Reports indicate the company is partnering with McDonald’s to enhance its $5 meal deal that includes a soft drink.
Overall, Coca-Cola surpassed Wall Street expectations, reporting $12.4 billion in revenue, or approximately $0.84 per share, while analysts had predicted revenue of around $11.76 billion, equating to roughly $0.81 per share.
The company has revised its forecast for organic revenue growth to between 9% and 10%, up from its previous estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in garnering interest from American consumers, who are focusing more on weight loss products and healthier living. A Gallup poll indicates that young adults in the U.S. are consuming significantly less alcohol than in the past. In early July, Pepsi attributed its lackluster second-quarter performance to a series of product recalls.