Weight loss medications and an increase in non-alcoholic beverage options have led to a decline in soda purchases among consumers in the United States.
Despite these challenges, Coca-Cola reported strong earnings for the second quarter on Tuesday, benefiting from high global demand for its beverages, and subsequently raised its full-year revenue guidance.
Coca-Cola’s CEO, James Quincey, expressed optimism about the company’s second-quarter performance, highlighting solid growth in both revenue and operating income amid a changing market landscape.
Conversely, in North America, Coca-Cola experienced a 1% drop in volume sales during the quarter. Quincey attributed this decline to reduced activity in away-from-home consumption channels, which encompass water, sports drinks, coffee, tea, and soda offerings.
The volume decrease was somewhat balanced by successful sales of Fairlife milk and strong retail growth of Coca-Cola, which ranked first and second in their category, respectively.
To mitigate the downturn, Coca-Cola is collaborating with dining establishments to include its soda in combo meal deals. Reports indicate that the company is working with McDonald’s to enhance its $5 meal deal, which features a soft drink.
Overall, Coca-Cola outperformed Wall Street expectations, reporting $12.4 billion in revenue and earnings of approximately $0.84 per share. Analysts had anticipated revenue of $11.76 billion and earnings around $0.81 per share, according to FactSet.
The company has now updated its organic revenue growth forecast to between 9% and 10%, a revision from its earlier estimate of 8% to 9%.
Similar to Coca-Cola, Pepsi is facing difficulties in attracting U.S. consumers, who are increasingly opting for products that focus on weight loss and healthier lifestyles. A Gallup poll indicates that young adults in the U.S. are consuming significantly less alcohol than in previous years. In early July, Pepsi attributed its lackluster second-quarter performance to a series of product recalls.