Weight loss medications and non-alcoholic beverages are leading consumers in the U.S. to reduce soda purchases.
Despite this trend, Coca-Cola reported strong earnings for the second quarter, largely due to global demand for its carbonated drinks, prompting the company to raise its full-year outlook.
Coca-Cola CEO James Quincey expressed satisfaction with the company’s quarterly performance, stating that it showed solid growth in both revenue and operating income despite a fluctuating market.
In North America, however, sales volumes dropped by 1% during the quarter. Quincey noted in the earnings call that this decline in the U.S. was linked to decreased consumer activity in away-from-home settings, affecting sales of water, sports drinks, coffee, tea, and sodas.
Coca-Cola indicated that the decline was somewhat mitigated by the performance of Fairlife milk and its flagship beverage, Coke, which recorded notable retail sales growth.
To counteract the sales dip, Quincey mentioned that Coca-Cola is teaming up with fast-food chains to include its sodas in combo meals. The company is collaborating with McDonald’s to enhance its $5 meal deal that comes with a soft drink.
Overall, Coca-Cola surpassed Wall Street’s expectations during the second quarter, reporting revenues of $12.4 billion, equating to approximately $0.84 per share, while the market had anticipated revenues of around $11.76 billion, or roughly $0.81 per share.
The company has now revised its forecast for organic revenue growth to between 9% and 10%, up from its previous estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in engaging U.S. consumers, who are becoming more inclined towards products emphasizing weight loss and healthy choices. A recent Gallup poll indicates that young adults in the U.S. are consuming significantly less alcohol than in the past. In early July, Pepsi attributed its lackluster second quarter to several product recalls.