Weight loss medications and a rise in non-alcoholic beverage options are causing U.S. consumers to reduce their soda purchases.
Despite this trend, Coca-Cola reported strong second-quarter earnings, driven by significant global demand for its beverages. As a result, the company has raised its full-year revenue projections.
Coca-Cola’s CEO, James Quincey, expressed optimism regarding the company’s performance, highlighting solid growth in both top-line revenue and operating income in a rapidly evolving market.
Nevertheless, Coca-Cola experienced a 1% decline in volume sales in North America during the quarter. Quincey attributed this drop to reduced sales in “away-from-home channels,” which encompass a variety of beverages, including water, sports drinks, coffee, tea, and soda.
The decline in soda sales was somewhat offset by the success of Fairlife milk and the company’s flagship product, Coca-Cola, which ranked first and second in retail sales growth for the quarter.
To counteract the decrease in volume sales, Coca-Cola is collaborating with fast-food chains to include its soft drinks in meal deals. The company is reportedly partnering with McDonald’s to enhance the appeal of its $5 meal deal, which comes with a soft drink.
Overall, Coca-Cola surpassed market expectations, reporting $12.4 billion in revenue for the second quarter, translating to earnings of approximately $0.84 per share. This exceeded predictions of $11.76 billion in revenue, or roughly $0.81 per share.
The company has also increased its forecast for organic revenue growth to between 9% and 10%, up from its earlier estimate of 8% to 9%.
PepsiCo is facing similar challenges as U.S. consumers increasingly gravitate towards healthier options and products that support weight loss. In early July, Pepsi attributed its lackluster second-quarter performance to a series of product recalls.