Weight loss medications and non-alcoholic beverages are prompting consumers in the U.S. to cut back on soda purchases.
Despite this trend, Coca-Cola announced strong earnings for the second quarter, which were fueled by robust global demand, leading the company to revise its annual outlook upward. CEO James Quincey expressed optimism about the results, citing solid growth in both revenue and operating income against a shifting market landscape.
However, Coca-Cola experienced a 1% decline in volume sales in North America during the quarter. Quincey attributed the decrease in the U.S. division to a downturn in away-from-home sales, which include water, sports drinks, coffee, tea, and soda. The decline was somewhat mitigated by growth in their Fairlife milk line and strong retail sales for Coca-Cola itself.
To combat the sales drop, Coca-Cola is collaborating with food chains to include its sodas in combo meal offerings. Reports indicate that they are partnering with McDonald’s to enhance the value of the fast-food chain’s $5 meal deal, which features a soft drink.
Overall, Coca-Cola surpassed Wall Street expectations, reporting $12.4 billion in revenue for the second quarter, or about $0.84 per share, while forecasts predicted $11.76 billion, averaging around $0.81 per share. The company revised its organic revenue growth forecast to 9% to 10%, an increase from the earlier projection of 8% to 9%.
Pepsi is facing similar challenges as it seeks to engage U.S. consumers increasingly leaning towards weight loss products and healthier lifestyles. In early July, Pepsi attributed its weaker second-quarter performance to several recalls affecting its product lineup.