Weight loss medications and non-alcoholic alternatives are leading U.S. consumers to rethink their soda purchases.
Despite this trend, Coca-Cola reported strong second-quarter earnings, largely fueled by global demand for its beverages. This prompted the company to raise its full-year financial outlook.
CEO James Quincey remarked on the positive results, highlighting solid growth in revenue and operating income amid a shifting market landscape.
However, Coca-Cola experienced a 1% decline in volume sales in North America during the quarter. Quincey explained this dip was influenced by a decrease in sales within “away-from-home channels,” which cover water, sports drinks, coffee, tea, and soda.
The decline was somewhat compensated by the success of its Fairlife milk and its flagship soda, Coke, which ranked highly in retail sales growth.
To counteract the volume drop, Quincey noted that Coca-Cola is collaborating with food chains to integrate soda into combo meals. The beverage giant is reportedly working with McDonald’s to enhance its $5 meal deal that includes a soft drink.
Coca-Cola exceeded Wall Street expectations, announcing revenues of $12.4 billion for the second quarter, translating to approximately $0.84 per share. Analysts had predicted revenues of $11.76 billion, or around $0.81 per share.
The company has adjusted its forecast for organic revenue growth to between 9% and 10%, revising its earlier estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in attracting U.S. consumers who are leaning toward weight-loss-focused and healthier options. A recent Gallup poll indicated that young adults in the U.S. are consuming significantly less alcohol. In July, Pepsi attributed a lackluster second quarter to a series of product recalls.