Weight loss medications and non-alcoholic drink alternatives are causing a slowdown in soda purchases among consumers in the United States.
Despite this trend, Coca-Cola reported strong second-quarter earnings, benefiting from high global demand for its beverages. This positive performance led the company to revise its full-year projections upward.
CEO James Quincey expressed optimism about the results, noting solid revenue and operating income growth amid a shifting market landscape.
However, Coca-Cola experienced a 1% decline in volume sales in North America during the quarter. Quincey attributed this drop to decreased sales in “away-from-home channels,” which encompass their offerings such as water, sports drinks, coffee, tea, and soda.
The decline was somewhat mitigated by strong sales from Fairlife milk and Coca-Cola itself, which ranked first and second in retail sales growth for the quarter.
To counter the sales dip, Quincey mentioned that Coca-Cola is collaborating with restaurant chains to integrate its sodas into combo meal deals. Notably, they are partnering with McDonald’s to enhance its $5 meal deal that includes a soft drink.
Overall, Coca-Cola outperformed Wall Street expectations, posting $12.4 billion in revenue for the second quarter, translating to approximately $0.84 per share. Analysts had anticipated revenue of $11.76 billion, or about $0.81 per share.
The company has now adjusted its forecast for organic revenue growth to between 9% and 10%, up from its previous estimate of 8% to 9%.
Meanwhile, Pepsi is facing its own challenges in gaining traction with U.S. consumers, who prioritize weight loss and healthier lifestyle choices. A Gallup poll indicates that young adults in the U.S. are consuming significantly less alcohol than before. Earlier this month, Pepsi attributed its lackluster second quarter to a series of product recalls.