Weight loss medications and the availability of non-alcoholic beverages have led consumers in the U.S. to cut back on soda purchases.
Despite this trend, Coca-Cola reported strong second-quarter earnings on Tuesday, spurred by robust global demand for its beverages, which has prompted the company to increase its full-year revenue projections.
James Quincey, CEO of Coca-Cola, expressed optimism about the company’s performance, stating that the second-quarter results showed solid growth in both revenue and operating income amidst a shifting market landscape.
However, North America saw a 1% decline in volume sales during the quarter. Quincey attributed this drop primarily to weaker performance in “away-from-home channels,” which includes water, sports drinks, coffee, tea, and soda products.
Coca-Cola noted that this decline was somewhat mitigated by its Fairlife milk product and the ongoing popularity of its Coca-Cola soda, which ranked first and second in retail sales growth during the quarter.
To counter the decline, Coca-Cola is collaborating with fast food chains to make its sodas a staple in combo meals. Reports indicate that the company is working with McDonald’s to enhance the fast food giant’s $5 meal deal that features a soft drink.
Overall, Coca-Cola exceeded Wall Street expectations by recording $12.4 billion in revenue for the second quarter, translating to approximately $0.84 per share. Analysts had projected revenues of $11.76 billion, or about $0.81 per share.
The company has raised its forecast for organic revenue growth to between 9% and 10%, up from the previous estimate of 8% to 9%.
Similarly, Pepsi has faced challenges as U.S. consumers increasingly lean towards products that focus on weight management and healthy lifestyles. A recent Gallup poll indicates that young adults in the U.S. are consuming significantly less alcohol than before. In early July, Pepsi cited a series of product recalls as contributing factors to its lackluster second-quarter performance.