Consumers in the U.S. are increasingly delaying soda purchases due to the popularity of weight loss medications and non-alcoholic alternatives.
In contrast, Coca-Cola reported strong second-quarter earnings on Tuesday, buoyed by solid global demand for its beverages, leading the company to elevate its full-year forecast. CEO James Quincey expressed optimism about the quarter’s results, highlighting growth in revenue and operating income amid a dynamic market.
Despite this positive performance, Coca-Cola experienced a 1% drop in volume sales in North America during the quarter. Quincey noted that the decline in its U.S. segment was largely attributed to reduced consumer traffic in away-from-home channels, which encompass water, sports drinks, coffee, tea, and soda products.
This decline was somewhat counterbalanced by the success of its Fairlife milk brand and Coke, which ranked first and second in retail sales growth, respectively. To address the volume decrease, Quincey mentioned that Coca-Cola is collaborating with restaurant chains to incorporate its sodas into meal combos, particularly working with McDonald’s to enhance its $5 meal deal which includes a soft drink.
Coca-Cola’s performance surpassed Wall Street’s expectations, reporting revenue of $12.4 billion or approximately $0.84 per share, while analysts had predicted revenue of $11.76 billion, around $0.81 per share. The company also raised its forecast for organic revenue growth to between 9% and 10%, up from the earlier estimate of 8% to 9%.
Pepsi, facing similar challenges, is also having difficulty engaging U.S. consumers who are increasingly leaning towards healthier options and weight loss products. A recent Gallup poll indicates that young adults in the U.S. are consuming significantly less alcohol. In early July, Pepsi attributed its lackluster second quarter to a series of product recalls.