Weight loss medications and non-alcoholic alternatives are causing U.S. consumers to hold back on soda purchases. Despite this trend, Coca-Cola reported strong earnings for the second quarter, supported by healthy global demand, which led the company to raise its full-year projections.
Coca-Cola’s CEO, James Quincey, expressed optimism about the results, highlighting solid growth in revenue and operating income despite challenging market conditions. Nevertheless, North America saw a 1% decline in volume sales during the quarter. Quincey attributed this downturn to reduced consumer activity in away-from-home channels, which include beverages such as water, sports drinks, coffee, tea, and soda.
The decline in soda sales was partially balanced out by an increase in Fairlife milk sales and the strong retail performance of Coca-Cola itself, which outpaced other products in sales growth.
To mitigate the volume drop, Coca-Cola is collaborating with fast-food chains to incorporate its beverages into combo meal offerings. Reports indicate they are working with McDonald’s to enhance the fast-food chain’s $5 meal deal, which features a soft drink.
Coca-Cola performed better than Wall Street expectations, reporting $12.4 billion in revenue and earnings of approximately $0.84 per share. Analysts had anticipated revenue around $11.76 billion with earnings of about $0.81 per share. The company now anticipates organic revenue growth between 9% and 10%, revising its earlier forecast from 8% to 9%.
Similarly, Pepsi is facing challenges in gaining traction with U.S. consumers who are focused on weight loss and healthier lifestyle choices. A recent Gallup poll indicated a decline in alcohol consumption among young adults in the U.S., contributing to this shift. In early July, Pepsi attributed its lackluster second-quarter performance to a series of product recalls.