Consumers in the U.S. are increasingly postponing soda purchases due to the rise of weight loss medications and non-alcoholic alternatives.
Despite this trend, Coca-Cola announced strong second-quarter earnings, buoyed by high global demand for its beverages, which led the company to raise its full-year guidance. CEO James Quincey expressed optimism about the results, highlighting solid growth in revenue and operating income amid a changing market.
Nevertheless, the company experienced a 1% drop in volume sales in North America during the quarter. Quincey attributed this decline to “softness in away-from-home channels,” which encompass its water, sports drinks, coffee, tea, and soda lines.
The decline in volume sales was somewhat mitigated by the success of Coca-Cola’s Fairlife milk line and its flagship soda, which ranked first and second in retail sales growth for the quarter. To address the fall in soda sales, the company is collaborating with food chains to integrate its beverages into combo meal deals. Reports suggest that Coca-Cola is working with McDonald’s to enhance the appeal of its $5 meal deal, which includes a soft drink.
Coca-Cola surpassed Wall Street’s predictions during the second quarter, reporting $12.4 billion in revenue, equivalent to approximately $0.84 per share. Analysts had projected the company would earn about $11.76 billion, or around $0.81 per share, according to FactSet.
The company has now adjusted its forecast for organic revenue growth to between 9% and 10%, an increase from its earlier estimate of 8% to 9%.
Similarly, PepsiCo is facing challenges in capturing the attention of U.S. consumers, who are gravitating toward products that emphasize weight loss and healthier lifestyles. A 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 underwhelming second-quarter performance to a series of product recalls.