Weight loss medications and non-alcoholic beverages have led to a decline in soda purchases among U.S. consumers.
Despite this trend, Coca-Cola reported strong earnings for the second quarter, fueled by robust global demand for its products, which led the company to enhance its full-year outlook. CEO James Quincey expressed optimism about the results, highlighting solid topline and operating income growth in a shifting market.
However, Coca-Cola experienced a 1% decrease in volume sales in North America during the quarter. Quincey attributed this decline to reduced demand in away-from-home channels, which encompass water, sports drinks, coffee, tea, and soda products. The decrease was somewhat counterbalanced by the success of Fairlife milk and the strong retail sales of Coke, which ranked first and second in growth, respectively.
To address the volume drop, Coca-Cola is collaborating with food chains, such as McDonald’s, to incorporate its sodas into combo meals. This partnership aims to enhance the fast-food chain’s $5 meal deal, which includes a soft drink.
Coca-Cola outperformed Wall Street expectations, reporting $12.4 billion in revenue for the second quarter, translating to about $0.84 per share, surpassing the forecasted $11.76 billion, or approximately $0.81 per share. The company has raised its forecast for organic revenue growth to between 9% and 10%, an increase from its prior estimate of 8% to 9%.
In a similar vein, Pepsi is also grappling with shifting consumer preferences as more U.S. customers opt for products that emphasize weight loss and healthier lifestyles. In early July, Pepsi attributed its lackluster second-quarter performance to a series of recalls.