Consumers in the U.S. are becoming more hesitant to purchase sodas due to the increasing popularity of weight loss drugs and non-alcoholic alternatives.
Despite these trends, Coca-Cola reported strong earnings for the second quarter on Tuesday, largely due to high global demand for its beverage products, which led the company to raise its annual guidance.
Coca-Cola’s CEO, James Quincey, expressed optimism about the company’s performance, stating, “We are encouraged with our second-quarter results, which delivered solid topline and operating income growth in an ever-changing landscape.”
However, in North America, Coca-Cola experienced a 1% decline in volume sales for the quarter. Quincey noted that this drop was mainly due to “softness in away-from-home channels,” which encompasses their water, sports drinks, coffee, tea, and soda offerings.
The decline in sales was somewhat mitigated by the success of its Fairlife milk and its flagship product, Coke, which ranked highest and second in retail sales growth, respectively.
To combat the sales dip, Coca-Cola is collaborating with fast food chains to incorporate its sodas into combo meals. The beverage giant is reportedly working with McDonald’s to enhance the fast food chain’s $5 meal deal that includes a soft drink.
Coca-Cola surpassed Wall Street expectations, reporting $12.4 billion in revenue for the second quarter, translating to about $0.84 per share. Analysts had predicted revenue of $11.76 billion, or roughly $0.81 per share.
The company has also raised its forecast for organic revenue growth to between 9% and 10%, an increase from the previous estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in attracting U.S. consumers who are increasingly focusing on weight loss and healthier choices. A Gallup poll indicated that young adults in the U.S. are consuming significantly less alcohol than before. Earlier in July, Pepsi attributed its modest second quarter results to a series of product recalls.