Weight loss medications and non-alcoholic alternatives are leading U.S. consumers to reduce their soda purchases.
Despite this trend, Coca-Cola reported strong second-quarter earnings on Tuesday, fueled by robust global demand for its beverages, prompting the company to revise its full-year outlook upwards.
“We are encouraged by our second-quarter results, which showed solid growth in topline and operating income amidst a constantly evolving market,” stated Coca-Cola CEO James Quincey.
However, the company saw a 1% decline in volume sales in North America during the quarter. Quincey attributed this downturn to “softness in away-from-home channels,” which encompasses water, sports drinks, coffee, tea, and soda offerings.
Coca-Cola indicated that this decline was somewhat offset by its Fairlife milk brand and its flagship drink, Coke, which ranked first and second for retail sales growth during the quarter.
To counteract the volume decline, Quincey mentioned that Coca-Cola is collaborating with food service chains to incorporate its sodas into combo meals. Notably, the company is working with McDonald’s to enhance the fast-food chain’s $5 meal deal, which includes a beverage.
Overall, Coca-Cola exceeded analysts’ expectations, reporting revenue of $12.4 billion for the second quarter, approximately $0.84 per share. Analysts had predicted revenue of $11.76 billion, or around $0.81 per share, according to FactSet.
The company has now raised its forecast for organic revenue growth to between 9% and 10%, an increase from the previous estimate of 8% to 9%.
Similarly, Pepsi is experiencing challenges in attracting U.S. consumers who are increasingly inclined toward products that emphasize weight loss and healthier choices. A Gallup poll has indicated that young adults in the U.S. are consuming significantly less alcohol than in the past. Additionally, Pepsi attributed its lackluster performance in the second quarter to a series of recalls that affected its operations.