Weight loss medications and non-alcoholic beverages are causing consumers in the U.S. to hesitate in purchasing sodas.
Despite this trend, Coca-Cola announced strong second-quarter earnings, bolstered by significant global demand for its products, which led the company to raise its full-year expectations. CEO James Quincey expressed optimism about the company’s results, highlighting growth in sales and operating income amid a challenging market.
In North America, however, Coca-Cola experienced a 1% decline in volume sales for the quarter. Quincey attributed this decrease to “softness in away-from-home channels,” which encompass water, sports drinks, coffee, tea, and soda. To mitigate this decline, the company noted that its Fairlife milk line and its flagship Coca-Cola soda had significant retail sales growth.
To further counteract the downturn, Coca-Cola is collaborating with food chains to integrate its sodas into combo meals. The company is reportedly working with McDonald’s to enhance the fast food outlet’s $5 meal deal, which includes a soft drink.
Despite the challenges, Coca-Cola exceeded Wall Street projections, reporting revenues of $12.4 billion for the second quarter, translating to about $0.84 per share. Analysts had anticipated revenue of $11.76 billion, or about $0.81 per share.
Coca-Cola has increased its organic revenue growth forecast to between 9% and 10%, up from a previous estimate of 8% to 9%.
Pepsi, like Coca-Cola, is facing difficulties in capturing American consumers’ attention as they gravitate towards products that emphasize health and weight management. The trend has been noted among young adults, who are reportedly drinking less alcohol, as indicated by a Gallup poll. Earlier in July, Pepsi attributed its muted second-quarter performance to a series of product recalls.