Weight loss medications and a rise in non-alcoholic beverage options have caused U.S. consumers to restrain their soda purchases.
Despite this trend, Coca-Cola reported strong second-quarter earnings, boosted by elevated global demand for its beverage products, leading the company to increase its full-year outlook.
Coca-Cola CEO James Quincey remarked, “We are encouraged with our second-quarter results, which delivered solid topline and operating income growth in an ever-changing landscape.”
Nonetheless, Coca-Cola experienced a 1% decline in volume sales in North America for the quarter. Quincey explained that the reduction in sales in the U.S. was primarily due to “softness in away-from-home channels,” affecting sales across its water, sports drinks, coffee, tea, and sodas.
This decline was somewhat alleviated by the success of Fairlife milk and Coca-Cola itself, which ranked first and second in retail sales growth, respectively, during the quarter.
To counteract the slump, Quincey mentioned that Coca-Cola is collaborating with food chains to include its sodas as part of combo meals. The company is reportedly working with McDonald’s to enhance the fast-food chain’s $5 meal promotion, which includes a soft drink.
Overall, Coca-Cola exceeded Wall Street projections, reporting revenues of $12.4 billion for the second quarter, translating to approximately $0.84 per share. Analysts had anticipated revenues of $11.76 billion, or about $0.81 per share.
The company has now revised its forecast for organic revenue growth to between 9% and 10%, up from the previous estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in capturing the attention of U.S. consumers, who are increasingly gravitating towards products that emphasize weight loss and healthier lifestyle choices. A recent Gallup poll indicated that young adults in the U.S. are consuming significantly less alcohol than in previous years. In early July, Pepsi attributed its lackluster second quarter to a series of product recalls.