Weight loss medications and non-alcoholic alternatives are causing consumers in the U.S. to be less inclined to purchase sodas.
Despite these trends, Coca-Cola reported strong second-quarter earnings, buoyed by robust global demand for its beverages, which led the company to raise its full-year projections. CEO James Quincey expressed optimism about the quarterly results, highlighting solid growth in revenue and operating income amid a dynamic market.
However, the company faced challenges in North America, where soda volume sales fell by 1% in the quarter. Quincey attributed the decline to weaker sales in venues outside the home, impacting categories including water, sports drinks, coffee, tea, and sodas.
The drop in sales was somewhat mitigated by growth in Coca-Cola’s Fairlife milk line and strong retail performance from its flagship soda, Coke, which ranked first and second in retail sales growth for the quarter. To address the decline, Coca-Cola is collaborating with fast-food chains like McDonald’s to incorporate its sodas into combo meals, enhancing the value of meal deals.
Coca-Cola surpassed analysts’ expectations during the second quarter, reporting $12.4 billion in revenue, translating to about $0.84 per share. Analysts had predicted a revenue of $11.76 billion, or approximately $0.81 per share. The company has now revised its forecast for organic revenue growth to between 9% and 10%, increasing from its earlier estimate of 8% to 9%.
Pepsi, similarly, has faced challenges in attracting U.S. consumers as they lean more towards products associated with weight loss and healthier lifestyles. Recent data indicate that younger adults in the U.S. are consuming significantly less alcohol. In early July, Pepsi cited multiple product recalls as a reason for its lackluster performance in the second quarter.