Weight loss medications and non-alcoholic beverage options are causing consumers in the U.S. to reduce their soda purchases.
Despite these challenges, Coca-Cola announced strong second-quarter earnings this week, fueled by high global demand for its beverages, leading the company to revise its full-year guidance upward.
CEO James Quincey expressed optimism about the company’s results, noting “solid topline and operating income growth in an ever-changing landscape.”
However, volume sales in North America fell by 1% during the quarter. Quincey attributed this decline to weakened performance in “away-from-home channels,” which encompasses water, sports drinks, coffee, tea, and soda. The dip was partially mitigated by the performance of Fairlife milk and Coke, which ranked first and second in retail sales growth for the quarter.
To combat the sales downturn, Coca-Cola is collaborating with restaurant chains to include its sodas in combo meals. The company has reportedly joined forces with McDonald’s to enhance the fast-food chain’s $5 meal deal, which incorporates a soft drink.
Overall, Coca-Cola exceeded Wall Street’s forecasts, reporting $12.4 billion in revenue 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.
The company has now raised its organic revenue growth forecast to between 9% and 10%, up from the previous estimate of 8% to 9%.
Pepsi is facing similar challenges in attracting U.S. consumers, who are increasingly opting for products that emphasize weight loss and healthier choices. A Gallup poll indicated that young adults in the U.S. are consuming significantly less alcohol than in the past. In early July, Pepsi pointed to a series of product recalls as a factor in its lackluster second-quarter performance.