The demand for weight loss drugs and non-alcoholic options has led to a decline in soda purchases among U.S. consumers.
Despite these challenges, Coca-Cola reported strong second-quarter earnings on Tuesday, driven by solid global demand for its beverages. This success has prompted the company to raise its full-year guidance.
“We are pleased with our second-quarter results, which demonstrated solid top-line growth and operating income in a dynamic environment,” said Coca-Cola CEO James Quincey in a statement.
In North America, however, volume sales fell by 1% during the quarter. Quincey explained to investors that this decline in the U.S. segment was attributed to reduced sales in “away-from-home channels,” which encompass water, sports drinks, coffee, tea, and soda products.
The decline in volume was somewhat offset by the performance of Fairlife milk and Coca-Cola itself, which saw significant retail sales growth, occupying the top two positions in their category during the quarter.
To address the downturn, Quincey mentioned that Coca-Cola is collaborating with food chains to include its sodas in combo meals. The company is reportedly working with McDonald’s to enhance the fast-food chain’s $5 meal deal that includes a soft drink.
Overall, Coca-Cola exceeded Wall Street expectations, reporting $12.4 billion in revenue for the second quarter, equivalent to approximately $0.84 per share. Analysts had anticipated revenue of $11.76 billion, or about $0.81 per share, according to FactSet.
The company has adjusted its forecast for organic revenue growth to between 9% and 10%, revising its earlier prediction of 8% to 9%.
Like Coca-Cola, Pepsi is also facing difficulties in attracting U.S. consumers, who are shifting towards healthier products and weight loss-focused options. A Gallup poll suggests that young adults in the U.S. are drinking significantly less alcohol than before. In early July, Pepsi attributed its lackluster second-quarter performance to a series of product recalls.