Weight loss medications and non-alcoholic alternatives are leading consumers in the United States to hold back on soda purchases.
Despite this trend, Coca-Cola reported strong earnings for the second quarter, benefiting from significant global demand for its soda products, prompting the company to raise its full-year revenue forecast.
Coca-Cola CEO James Quincey expressed optimism about the company’s performance, noting that the results showcased solid growth in both revenue and operating income, amid a fluctuating market.
However, the company’s volume sales in North America fell by 1% during the quarter. Quincey attributed the drop to “softness in away-from-home channels,” which encompass their water, sports drinks, coffee, tea, and soda offerings. This decline was somewhat balanced by growth in sales of Fairlife milk and Coca-Cola itself, which ranked first and second in retail sales growth during the quarter.
To address the sales dip, Quincey mentioned that Coca-Cola is collaborating with food chains to include its sodas in combo meal offers. The company is reportedly working with McDonald’s to enhance the fast-food chain’s $5 meal deal that includes a soft drink.
Overall, Coca-Cola exceeded Wall Street expectations, with second-quarter revenue reaching $12.4 billion, translating to about $0.84 per share. Analysts had projected revenue of $11.76 billion, or roughly $0.81 per share.
The company has also revised its organic revenue growth forecast to between 9% and 10%, an increase from an earlier prediction of 8% to 9%.
Pepsi, like Coca-Cola, is facing challenges in capturing the interest of U.S. consumers, who are increasingly opting for products that promote weight loss and healthier lifestyles. A recent Gallup poll highlights that young adults in the U.S. are consuming significantly less alcohol than in previous years. Pepsi attributed its lackluster second-quarter performance to a series of product recalls.