Weight loss drugs and an increase in non-alcoholic beverage options have caused a shift in consumer behaviors, leading to reduced soda purchases in the United States.
Despite challenges, Coca-Cola reported strong earnings for the second quarter, fueled by robust global demand for its beverages. This prompted the company to increase its full-year guidance. Coca-Cola CEO James Quincey expressed optimism, stating, “We are encouraged with our second-quarter results, which delivered solid topline and operating income growth in an ever-changing landscape.”
However, North America saw a 1% decline in volume sales during the quarter. Quincey attributed this drop to reduced sales in “away-from-home channels,” which encompass various beverage categories, including water, sports drinks, coffee, tea, and sodas. The decline was somewhat tempered by growth in its Fairlife milk products and its flagship soda, Coca-Cola, which ranked first and second in retail sales growth.
To tackle the sales decline, Coca-Cola is collaborating with food chains to integrate its sodas into combo meals. Reports indicate that the company is working with McDonald’s to enhance the fast food chain’s $5 meal deal, which includes a soft drink.
Overall, Coca-Cola surpassed Wall Street expectations, reporting revenue of $12.4 billion for the second quarter, equating to around $0.84 per share. Analysts had predicted revenue would be $11.76 billion, or approximately $0.81 per share.
The company now anticipates organic revenue growth between 9% and 10%, up from its earlier forecast of 8% to 9%.
Similarly, Pepsi is facing its own challenges in attracting U.S. consumers who are increasingly leaning towards healthier products and weight loss solutions. A recent Gallup poll indicated a significant decrease in alcohol consumption among young adults in the U.S. In early July, Pepsi attributed its subdued second quarter to a series of product recalls.