Weight loss medications and non-alcoholic alternatives are causing U.S. consumers to reduce their soda purchases.
Despite this trend, Coca-Cola reported strong earnings for the second quarter, buoyed by robust global demand for its beverages, leading the company to increase its full-year outlook. CEO James Quincey expressed optimism about the company’s performance, highlighting “solid topline and operating income growth in an ever-changing landscape.”
However, in North America, Coca-Cola experienced a 1% decline in volume sales during the quarter. Quincey noted that the drop in the U.S. division was attributed to a “softness in away-from-home channels,” which include its water, sports drinks, coffee, tea, and soda offerings.
This decline was somewhat mitigated by the success of Fairlife milk and the flagship beverage, Coke, which ranked first and second in retail sales growth during this period. To counteract the sales drop, Coca-Cola is collaborating with restaurant chains to include its sodas in combo meals. Reports indicate that the company is working with McDonald’s to enhance the fast-food chain’s $5 meal deal, which features a soft drink.
Overall, Coca-Cola exceeded Wall Street expectations, reporting $12.4 billion in revenue, or approximately $0.84 per share, compared to analysts’ predictions of $11.76 billion in revenue, or about $0.81 per share.
Additionally, Coca-Cola has updated its forecast for organic revenue growth to between 9% and 10%, raising it from the previous estimate of 8% to 9%.
Pepsi, similarly, is facing challenges in capturing the interest of U.S. consumers, who are increasingly opting for weight loss and healthier options. A Gallup poll indicates that younger adults in the U.S. are drinking significantly less alcohol than in the past. In early July, Pepsi attributed its lower second-quarter performance to several product recalls.