U.S. consumers are delaying soda purchases, influenced by the rise of weight loss drugs and non-alcoholic alternatives.
Despite this trend, Coca-Cola reported strong earnings for the second quarter on Tuesday, largely due to solid global demand for its beverages, leading the company to raise its yearly forecast.
Coca-Cola’s CEO, James Quincey, expressed satisfaction with the second-quarter results, highlighting significant growth in both revenue and operating income amid a changing market landscape.
However, in North America, the company experienced a 1% decline in volume sales for the quarter. Quincey noted that this decrease was linked to weakened performance in “away-from-home channels,” which encompasses water, sports drinks, coffee, tea, and soda sales.
The decline was somewhat mitigated by the success of Fairlife milk and Coca-Cola itself, which ranked first and second in retail sales growth during this period. To counteract the sales drop, Quincey indicated that Coca-Cola is collaborating with restaurants to include its sodas in combo meal offerings, including efforts with McDonald’s to enhance its $5 meal deal that features a soft drink.
Coca-Cola surpassed Wall Street’s predictions with second-quarter revenues reaching $12.4 billion, or approximately $0.84 per share, exceeding estimates of $11.76 billion and $0.81 per share.
The company has revised its forecast for organic revenue growth to between 9% and 10%, up from an earlier projection of 8% to 9%.
Similarly, Pepsi has been facing challenges in attracting U.S. consumers as they increasingly opt for health-conscious choices and weight loss products. Pepsi reported subdued results for the second quarter, partly attributing its performance to multiple product recalls.