Consumers in the U.S. are holding back on purchasing sodas, influenced by the popularity of weight loss medications and non-alcoholic options.
Despite this trend, Coca-Cola reported strong earnings for the second quarter, driven by significant global demand for its beverage products. The company has also raised its full-year earnings forecast as a result.
CEO James Quincey expressed optimism about the quarter’s performance, highlighting substantial growth in top-line revenue and operating income amid a shifting market landscape. However, Coca-Cola experienced a 1% decline in volume sales in North America. Quincey attributed this decrease to “softness in away-from-home channels,” which encompass its water, sports drinks, coffee, tea, and soda.
The decline was somewhat mitigated by sales of Fairlife milk and strong performance from its Coke brand, which ranked first and second in retail sales growth during the quarter. To address the volume drop, Coca-Cola is collaborating with food chains to incorporate its soda products into combo meals, notably working with McDonald’s to enhance its $5 meal deal.
Coca-Cola exceeded Wall Street’s expectations, reporting $12.4 billion in revenue, or approximately $0.84 per share, compared to analysts’ predictions of $11.76 billion or roughly $0.81 per share.
Looking ahead, Coca-Cola revised its organic revenue growth forecast to between 9% and 10%, an increase from the earlier estimate of 8% to 9%.
Like Coca-Cola, Pepsi is also facing challenges in captivating U.S. consumers, who are increasingly gravitating towards products that promote weight loss and healthier lifestyles. A Gallup poll indicated that young adults are consuming less alcohol than in previous years. Pepsi reported subdued results for its second quarter, partly attributing this to a series of recalls.