The rise of weight loss drugs and non-alcoholic alternatives is causing U.S. consumers to reconsider their soda purchases. In light of recent studies, Novo Nordisk’s drug Ozempic has been shown to lower the risk of heart attacks and strokes, which may influence consumer behavior further.
Despite this trend, Coca-Cola reported strong earnings for the second quarter, attributing the success to high global demand for its beverage products. CEO James Quincey expressed optimism about the company’s performance, highlighting solid growth in revenue and operating income.
Nonetheless, Coca-Cola faced a 1% drop in volume sales in North America during the same period. Quincey noted that this decline was largely due to decreased activity in away-from-home channels, which encompass a range of products including water, sports drinks, coffee, tea, and sodas. The fall in sales was somewhat mitigated by the success of its Fairlife milk brand and Coke itself, which achieved notable retail sales growth.
To address the dip in soda sales, Quincey indicated that Coca-Cola is collaborating with food chains to integrate its products into combo meal offerings. Specifically, they are partnering with McDonald’s to enhance the fast food chain’s $5 meal deal that includes a soft drink.
Overall, Coca-Cola exceeded analysts’ expectations for the quarter, generating $12.4 billion in revenue, which translates to about $0.84 per share, outperforming the expected $11.76 billion in sales according to FactSet.
The company has also revised its revenue growth projections, now anticipating an organic growth rate of 9% to 10%, an increase from the earlier estimate of 8% to 9%.
Similarly, Pepsi has encountered challenges in capturing the U.S. market, as consumers gravitate towards healthier options and weight loss products. In early July, Pepsi cited a series of recalls as a factor in its lackluster second-quarter performance.