Weight loss medications and non-alcoholic beverages are causing a slowdown in soda consumption in the United States, impacting major brands like Coca-Cola and Pepsi.
Despite these trends, Coca-Cola reported strong earnings for the second quarter, aided by robust global demand for its products. The company raised its full-year outlook as a result. Coca-Cola’s CEO, James Quincey, expressed optimism about the company’s second-quarter performance, highlighting solid growth in both revenue and operating income amid a shifting market landscape.
However, the North American segment experienced a 1% decline in volume sales during the quarter. Quincey attributed this drop to reduced sales in away-from-home channels, which include water, sports drinks, coffee, tea, and soda. The decline was somewhat mitigated by the popularity of Fairlife milk and Coca-Cola’s own soda, which ranked first and second in retail sales growth.
To counteract volume declines, Coca-Cola is collaborating with food chains to integrate their products into combo meal deals. Reports suggest that they are particularly focusing on enhancing the beverage offerings tied to McDonald’s $5 meal deal.
Coca-Cola surpassed Wall Street expectations, reporting $12.4 billion in revenue for the second quarter, translating to approximately $0.84 per share. Analysts had predicted revenue of $11.76 billion, or about $0.81 per share.
The company has revised its forecast for organic revenue growth to an anticipated range of 9% to 10%, up from an earlier estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in attracting U.S. consumers, who are increasingly focused on health-conscious products, including weight loss options. The company recently cited several product recalls as a reason for its lackluster second-quarter performance.