Weight loss medications and non-alcoholic beverage options are causing consumers in the U.S. to hold off on soda purchases. Despite this trend, Coca-Cola reported strong second-quarter earnings on Tuesday, buoyed by high global demand for its products, leading the company to enhance its full-year projections.
“We are pleased with our second-quarter results, which showcased solid growth in revenue and operating income in a rapidly changing market,” said Coca-Cola CEO James Quincey in a statement.
However, in North America, the company saw a 1% decrease in volume sales during the quarter. Quincey explained to investors during the earnings call that the decline in the U.S. segment was attributed to “softness in away-from-home channels,” impacting its water, sports, coffee, tea, and soda offerings.
This drop was partially mitigated by sales from Fairlife milk and Coca-Cola’s own products, with Coke and its offerings ranking first and second in retail sales growth during the quarter.
To counterbalance the decline, Quincey mentioned that Coca-Cola is collaborating with food chains to incorporate its soda in combo meals. Notably, the company is reportedly partnering with McDonald’s to enhance the fast-food chain’s $5 meal deal, which includes a soft drink.
Overall, Coca-Cola outperformed Wall Street predictions. For the second quarter, it reported revenues of $12.4 billion, translating to approximately $0.84 per share, while analysts had anticipated around $11.76 billion in revenue, or about $0.81 per share, according to FactSet.
The company has now adjusted its forecast for organic revenue growth to between 9% and 10%, a rise from its earlier prediction of 8% to 9%.
Similarly, Pepsi is facing challenges in engaging U.S. consumers, who are increasingly gravitating toward products that promote weight loss and healthier lifestyles. A Gallup poll indicates that young adults in the U.S. are consuming significantly less alcohol than in the past. In early July, Pepsi cited various product recalls as a reason for its lackluster performance in the second quarter.