Consumers in the U.S. are increasingly shifting away from soda, influenced by the popularity of weight loss drugs and non-alcoholic beverages.
Coca-Cola reported strong earnings for the second quarter on Tuesday, fueled by high global demand for its products, which led the company to raise its full-year forecast. CEO James Quincey expressed optimism about the results, noting solid revenue and operating income growth despite a challenging market.
In North America, however, volume sales dipped by 1% during the quarter. Quincey attributed this decline to weaker performance in “away-from-home channels,” which include water, sports drinks, coffee, tea, and sodas. The drop was somewhat balanced by the success of Fairlife milk and the Coca-Cola brand, which ranked first and second in retail sales growth, respectively.
To address the sales decline, Coca-Cola is collaborating with food chains to integrate its beverages into combo meals. The company is reportedly working with McDonald’s to enhance its $5 meal deal, which features a soft drink.
Despite the volume decrease, Coca-Cola exceeded Wall Street’s expectations, reporting $12.4 billion in revenue for the quarter, or about $0.84 per share, compared to predictions of $11.76 billion and $0.81 per share.
Coca-Cola has adjusted its forecast for organic revenue growth to between 9% and 10%, an increase from its prior prediction of 8% to 9%.
Similarly, Pepsi has faced challenges in attracting U.S. consumers, who are gravitating towards weight loss products and healthier choices. A recent Gallup poll indicated that young adults in the U.S. are consuming significantly less alcohol. In early July, Pepsi attributed its subdued second-quarter performance to a series of product recalls.