Weight loss medications and non-alcoholic beverages are causing consumers in the U.S. to reduce their soda purchases.
Despite this trend, Coca-Cola reported strong second-quarter earnings, benefitting from robust global demand for its products. The beverage company has raised its full-year guidance as a result.
Coca-Cola CEO James Quincey expressed optimism about the company’s performance, stating, “We are encouraged with our second-quarter results, which delivered solid topline and operating income growth in an ever-changing landscape.”
However, the company experienced a 1% decline in volume sales in North America during the quarter. Quincey pointed to a decrease in sales within “away-from-home channels,” which include its water, sports drinks, coffee, tea, and sodas. This decline was somewhat balanced by the success of Fairlife milk and Coke, which ranked first and second in retail sales growth for the quarter.
To combat the volume decline, Coca-Cola is collaborating with restaurant chains to incorporate its sodas into combo meals. Notably, the company is working with McDonald’s to enhance its $5 meal deal, which features a soft drink.
Overall, Coca-Cola exceeded Wall Street expectations with $12.4 billion in revenue for the second quarter, translating to approximately $0.84 per share. Analysts had anticipated revenues of $11.76 billion, or about $0.81 per share.
Coca-Cola has raised its forecast for organic revenue growth to between 9% and 10%, revising its earlier estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in attracting U.S. consumers, who are increasingly opting for weight loss products and healthier choices. A Gallup poll has indicated a significant decline in alcohol consumption among young adults in the U.S. Earlier this month, Pepsi attributed its subdued second-quarter performance to a series of product recalls.