Consumers in the U.S. are increasingly hesitant to purchase sodas, influenced by the availability of weight loss medications and non-alcoholic alternatives.
A recent study indicated that the oral version of Novo Nordisk’s drug Ozempic can significantly reduce the risk of heart attacks and strokes. Despite this trend, Coca-Cola announced strong earnings for the second quarter, bolstered by solid global demand for its beverage products. Following this performance, the company has raised its full-year financial outlook.
Coca-Cola CEO James Quincey expressed satisfaction with the company’s quarterly results, highlighting significant growth in topline and operating income amidst a shifting market landscape. However, North America saw a 1% decline in volume sales during the same quarter. Quincey explained to investors that this decrease was largely due to weakness in away-from-home channels, which encompass soda as well as water, sports drinks, coffee, and tea.
To mitigate this drop, Coca-Cola noted an increase in sales from its Fairlife milk brand and Coke, which ranked first and second in retail sales growth, respectively. Quincey also mentioned that the company is partnering with food chains to incorporate its sodas into combo meal offerings. Discussions are ongoing with McDonald’s to enhance the fast-food chain’s $5 meal deal, which features a soft drink.
In terms of financial performance, Coca-Cola exceeded Wall Street estimates, reporting $12.4 billion in revenue, or approximately $0.84 per share, surpassing the anticipated $11.76 billion in revenue. The company has now adjusted its forecast for organic revenue growth to between 9% and 10%, increasing its previous estimate of 8% to 9%.
Pepsi is facing similar challenges in attracting U.S. consumers, who are increasingly leaning towards products that focus on weight loss and healthier choices. According to a Gallup poll, young adults in the U.S. are consuming significantly less alcohol than before. In early July, Pepsi attributed its lackluster second-quarter performance to a series of product recalls.