Weight loss medications and a rise in non-alcoholic beverage options are causing U.S. consumers to reduce their soda purchases.
Despite these trends, Coca-Cola announced strong earnings for the second quarter on Tuesday, driven by high global demand for its beverages. This performance has led the company to raise its full-year forecasts.
Coca-Cola CEO James Quincey expressed optimism about the company’s second-quarter results, highlighting solid growth in both revenue and operating income amidst changing market conditions.
However, in North America, Coca-Cola experienced a 1% decline in volume sales during the quarter. Quincey informed investors that the drop in the U.S. market was influenced by reduced sales in “away-from-home channels,” which encompass water, sports drinks, coffee, tea, and soda.
The decline was somewhat mitigated by the success of Coca-Cola’s Fairlife milk and its flagship soda, which were the top two performers in retail sales growth during the quarter.
To counter the drop in soda sales, the company is collaborating with fast-food chains, including McDonald’s, to integrate its sodas into combo meals.
Overall, Coca-Cola’s financial results exceeded Wall Street expectations, reporting $12.4 billion in revenue, or approximately $0.84 per share, surpassing forecasts of $11.76 billion and $0.81 per share.
The company has also adjusted 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 leaning towards weight loss products and healthier lifestyle choices. In early July, Pepsi attributed its lackluster second-quarter performance to a series of product recalls.