Weight loss medications and non-alcoholic beverage options are causing consumers in the U.S. to reduce their soda purchases.
Despite this trend, Coca-Cola reported strong earnings for the second quarter, buoyed by high global demand for its products, resulting in an increase in its full-year projections. CEO James Quincey expressed optimism about the company’s performance, highlighting solid growth in revenue and operating income amid a changing market.
However, the beverage giant experienced a 1% decline in volume sales in North America during the quarter. Quincey attributed this drop to reduced sales in away-from-home venues, affecting their water, sports drinks, coffee, tea, and soda lines. He noted that this decline was somewhat mitigated by growth in their Fairlife milk and traditional Coke products, which ranked among the top for retail sales growth.
To combat the volume decrease, Coca-Cola is collaborating with food chains to integrate its beverages into meal deals. Notably, the company is working with McDonald’s to enhance its $5 meal deal, which comes with a beverage.
Coca-Cola surpassed Wall Street predictions in the second quarter, reporting revenue of $12.4 billion, equivalent to approximately $0.84 per share, exceeding the anticipated $11.76 billion and $0.81 per share, according to FactSet.
The company has raised its forecast for organic revenue growth to between 9% and 10%, an increase from the prior estimate of 8% to 9%.
Pepsi is similarly facing challenges in engaging U.S. consumers, who are increasingly choosing products aimed at weight loss and healthier lifestyles. Recent data indicates that young adults in the U.S. are consuming significantly less alcohol. In early July, Pepsi attributed its lackluster second quarter performance to several product recalls.