Weight loss medications and non-alcoholic beverage options are causing U.S. consumers to hesitate before purchasing sodas.
Despite this trend, Coca-Cola has reported strong earnings for the second quarter, driven by high global demand for its products, which has led the company to increase its full-year guidance.
“We are pleased with our second-quarter performance, which showed solid growth in revenue and operating income amid a changing market,” said Coca-Cola CEO James Quincey in a statement.
However, in North America, the company experienced a 1% decline in volume sales during the quarter. Quincey noted in the earnings call that the drop in the U.S. division was mainly due to a decrease in sales through “away-from-home channels,” which encompasses water, sports drinks, coffee, tea, and soda products.
This decline was somewhat mitigated by the success of its Fairlife milk and its signature soda, Coke, which ranked first and second in retail sales growth in the quarter.
To counteract the decrease in soda sales, Quincey mentioned that Coca-Cola is collaborating with restaurant chains to include its sodas in combo meals. The company is reportedly partnering with McDonald’s to enhance the fast-food chain’s $5 meal deal, which features a soft drink.
Despite the challenges, Coca-Cola surpassed Wall Street’s projections. In the second quarter, the company accounted for $12.4 billion in revenue, or approximately $0.84 per share, while analysts had anticipated revenues of $11.76 billion, or around $0.81 per share, based on FactSet data.
The company has adjusted its forecast for organic revenue growth to between 9% and 10%, increased from the previous estimate of 8% to 9%.
Pepsi, similar to Coca-Cola, has faced difficulties in attracting U.S. consumers who are increasingly leaning towards weight loss products and healthier choices. A Gallup poll indicates that young adults in the U.S. are drinking significantly less alcohol than before. In early July, Pepsi attributed its lackluster second quarter to a series of product recalls.