Weight loss medications and non-alcoholic alternatives are leading to reduced soda purchases among consumers in the U.S.
Despite this trend, Coca-Cola reported strong second-quarter earnings on Tuesday, boosted by robust global demand for its beverages, which prompted the company to adjust its full-year outlook positively.
Coca-Cola’s CEO, James Quincey, expressed optimism regarding the second-quarter results, noting solid growth in revenue and operating income amid a continuously evolving market.
However, in North America, the company experienced a 1% decline in volume sales for the quarter. Quincey informed investors during the earnings call that the drop in U.S. sales was largely due to reduced activity in “away-from-home channels,” which encompass various beverage categories including water, sports drinks, coffee, tea, and soda.
This decline was somewhat mitigated by the performance of Fairlife milk and Coca-Cola, which ranked first and second in retail sales growth during the quarter.
To address the decline, Quincey mentioned that Coca-Cola is collaborating with fast-food chains to integrate its beverages into combo meal offerings. Reports indicate that the company is partnering with McDonald’s to enhance its $5 meal deal, which includes a soft drink.
Overall, Coca-Cola surpassed analysts’ expectations, reporting $12.4 billion in revenue, equating to about $0.84 per share. Analysts had anticipated revenues of $11.76 billion or approximately $0.81 per share.
The company has now raised its forecast for organic revenue growth to between 9% and 10%, an increase from its earlier estimate of 8% to 9%.
Similarly, Pepsi is struggling to engage U.S. consumers who are increasingly opting for weight loss-oriented and healthier product options. A Gallup poll shows that young adults in the U.S. are consuming significantly less alcohol than before. Earlier in July, Pepsi attributed its underwhelming second quarter to multiple product recalls.