Consumers in the U.S. are delaying soda purchases in favor of weight loss medications and non-alcoholic alternatives.
Despite these challenges, Coca-Cola reported strong earnings for the second quarter, driven by high global demand for its beverages, prompting the company to increase its full-year guidance.
Coca-Cola’s CEO, James Quincey, expressed optimism about the company’s second-quarter results, noting significant growth in both revenue and operating income amid a shifting market.
However, the company experienced a 1% decline in volume sales in North America during the quarter. Quincey indicated that this drop was largely due to “softness in away-from-home channels,” encompassing water, sports drinks, coffee, tea, and sodas.
The decline was somewhat mitigated by sales from Fairlife milk and Coca-Cola’s flagship soda, which ranked among the top two for retail sales growth during the quarter.
To counteract the sales dip, Coca-Cola is collaborating with food chains to incorporate its sodas into combo meals. Notably, the beverage company is reportedly working with McDonald’s to enhance the fast-food chain’s $5 meal deal, which includes a soft drink.
Overall, Coca-Cola surpassed Wall Street expectations, reporting $12.4 billion in revenue for the second quarter, equating to approximately $0.84 per share. Analysts had predicted revenues of around $11.76 billion, or approximately $0.81 per share.
The company has now adjusted its forecast for organic revenue growth to between 9% and 10%, up from its previous estimate of 8% to 9%.
Similarly, PepsiCo is facing challenges in attracting U.S. consumers who are increasingly opting for weight loss-focused and healthier products. A Gallup poll noted that young adults in the U.S. are drinking significantly less alcohol than in previous years. In early July, Pepsi cited multiple product recalls as a factor in its lackluster second-quarter performance.