Weight loss medications and non-alcoholic beverage options are causing consumers in the U.S. to hesitate in purchasing sodas.
Despite these trends, Coca-Cola reported strong earnings for the second quarter, driven by healthy global demand for its products, which allowed the company to raise its full-year forecast. “We are encouraged with our second-quarter results, which delivered solid topline and operating income growth in an ever-changing landscape,” said CEO James Quincey in a statement.
However, the company experienced a 1% decline in volume sales in North America during the quarter. Quincey explained that this dip was primarily due to “softness in away-from-home channels,” which includes sales of water, sports drinks, coffee, tea, and soda. While overall soda sales were down, the decline was partially countered by the success of Fairlife milk and Coca-Cola itself, which ranked first and second in retail sales growth.
To combat the sales drop, Coca-Cola is collaborating with fast-food chains to incorporate its soda into combo meals. Reports suggest that the company is working with McDonald’s to enhance its $5 meal deal that includes a soft drink.
Coca-Cola exceeded Wall Street’s expectations during the second quarter, posting $12.4 billion in revenue, equating to about $0.84 per share, compared to forecasts of $11.76 billion or roughly $0.81 per share. The beverage manufacturer now estimates organic revenue growth will be between 9% and 10%, a revision from its earlier prediction of 8% to 9%.
Similarly, Pepsi is facing challenges as it seeks to appeal to U.S. consumers who are increasingly focused on weight loss and healthier lifestyles. Recent data from a Gallup poll indicates that young adults in the U.S. are consuming significantly less alcohol than in previous years. Earlier this month, Pepsi attributed its underwhelming second-quarter performance to a series of product recalls.