Weight loss medications and non-alcoholic alternatives are causing a slowdown in soda purchases among consumers in the United States. Despite this trend, Coca-Cola announced strong second-quarter earnings on Tuesday, supported by high global demand for its beverages, leading the company to increase its full-year revenue outlook.
Coca-Cola CEO James Quincey expressed satisfaction with the company’s performance, noting solid growth in overall revenue and operating income amid changing market conditions. However, the company’s volume sales in North America dipped by 1% during the quarter. Quincey attributed this decline to a decrease in sales from “away-from-home channels,” which encompass products like water, sports drinks, coffee, tea, and soda.
The decline was somewhat counterbalanced by Coca-Cola’s Fairlife milk brand and its flagship product, Coke, which achieved notable retail sales growth. To address the volume drop, Quincey mentioned that Coca-Cola is collaborating with restaurant chains to incorporate its sodas into combo meal deals. The company is reportedly partnering with McDonald’s to enhance its $5 meal offer, which includes a soft drink.
Coca-Cola ultimately surpassed Wall Street’s revenue expectations, reporting $12.4 billion for the quarter, equivalent to approximately $0.84 per share, while analysts had estimated $11.76 billion in revenue, roughly $0.81 per share.
The company has revised its forecast for organic revenue growth to between 9% and 10%, an increase from its earlier expectation of 8% to 9%.
Similarly, Pepsi is facing challenges in capturing U.S. consumers’ attention, as they increasingly shift toward products focusing on weight loss and healthier lifestyles. Research from Gallup indicates that young adults in the U.S. are drinking significantly less alcohol than in previous years. Additionally, Pepsi cited a series of product recalls for its lackluster performance in the second quarter.