Weight loss drugs and the growing preference for non-alcoholic beverages are leading U.S. consumers to cut back on soda purchases.
Despite this trend, Coca-Cola reported strong second-quarter earnings on Tuesday, fueled by robust global demand for its drinks, which prompted the company to raise its full-year guidance.
Coca-Cola CEO James Quincey expressed satisfaction with the company’s performance, noting that they achieved solid growth in both revenue and operating income amid a changing market.
In North America, however, volume sales fell by 1% in the quarter. Quincey attributed this decline to a slowdown in away-from-home channels, affecting products such as water, sports drinks, coffee, tea, and soda.
The decline was somewhat balanced by sales of Fairlife milk and Coca-Cola itself, which ranked first and second in retail sales growth, respectively.
To counter the volume drop, Quincey mentioned that Coca-Cola is collaborating with food chains to include its soda in combo meals. The company is reportedly working with McDonald’s to enhance the fast food chain’s $5 meal deal, which includes a soft drink.
Overall, Coca-Cola exceeded Wall Street expectations, reporting revenues of $12.4 billion for the second quarter, translating to approximately $0.84 per share. Analysts had predicted revenue of $11.76 billion, or about $0.81 per share.
Coca-Cola has now revised its forecast for organic revenue growth, projecting an increase of 9% to 10%, up from the previous estimate of 8% to 9%.
Similar to Coca-Cola, Pepsi is experiencing challenges in attracting U.S. consumers who are increasingly seeking healthier and weight-loss-oriented options. In early July, Pepsi cited several recalls as factors contributing to its subdued performance in the second quarter.