Weight loss medications and non-alcoholic beverages are causing American consumers to delay their soda purchases.
Despite this trend, Coca-Cola reported strong earnings for the second quarter, bolstered by robust global demand for its products. This success has led the company to raise its full-year outlook.
Coca-Cola CEO James Quincey expressed satisfaction with the company’s performance, highlighting solid revenue and operating income growth amidst market challenges.
However, the company experienced a 1% drop in volume sales in North America during the quarter. Quincey indicated that the decline in the U.S. was due to weaker sales in channels such as restaurants and convenience stores, affecting its water, sports drinks, coffee, tea, and soda offerings.
Coca-Cola noted that the decline was somewhat balanced by its Fairlife milk brand and strong sales of its flagship soda, Coke, which ranked first and second in retail sales growth for the period.
To counteract declining sales, the company is collaborating with fast food chains to incorporate its sodas into meal deals. Reports suggest a partnership with McDonald’s to enhance the visibility of the fast-food chain’s $5 meal deal, which includes a soft drink.
Financially, Coca-Cola exceeded Wall Street’s expectations, reporting revenue of $12.4 billion for the quarter, amounting to around $0.84 per share. Analysts had anticipated revenue of $11.76 billion, or approximately $0.81 per share.
Coca-Cola has now adjusted its forecast for organic revenue growth, expecting an increase between 9% and 10%, raising its prior estimate of 8% to 9%.
Meanwhile, Pepsi is also facing challenges in attracting U.S. consumers, who are increasingly focused on healthier options and weight loss products. In early July, Pepsi attributed its lackluster second-quarter performance to a series of product recalls.