Weight loss medications and non-alcoholic alternatives are leading U.S. consumers to reduce soda purchases.
Despite this trend, Coca-Cola reported strong earnings for the second quarter, boosted by high global demand for its beverages, prompting the company to raise its forecasts for the year.
Coca-Cola CEO James Quincey expressed optimism, stating, “We are encouraged with our second-quarter results, which delivered solid topline and operating income growth in an ever-changing landscape.”
However, the company experienced a 1% decline in volume sales in North America during the quarter. Quincey indicated that this drop was largely due to “softness in away-from-home channels,” which includes various beverage categories like water, sports drinks, coffee, tea, and soda.
The decline was somewhat mitigated by sales of Fairlife milk and strong performance from Coke, which ranked first and second in retail sales growth for the quarter.
To counter the volume decrease, Coca-Cola is collaborating with fast food chains to incorporate its sodas into combo meals. Reports suggest that Coca-Cola is partnering with McDonald’s to enhance the fast food chain’s $5 meal deal, which includes a soft drink.
Overall, Coca-Cola surpassed Wall Street predictions, with second-quarter revenue reaching $12.4 billion, or $0.84 per share, compared to estimates of $11.76 billion and $0.81 per share.
The company has revised its forecast for organic revenue growth to between 9% and 10%, up from an earlier estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in attracting U.S. consumers who are shifting towards products that emphasize weight loss and healthier lifestyles. A Gallup poll indicates that young adults in the U.S. are drinking significantly less alcohol than before. In early July, Pepsi attributed its lackluster second quarter to a series of product recalls.