Consumers in the U.S. are holding off on buying sodas, influenced by weight loss drugs and non-alcoholic options. Zepbound, a weight loss drug from Eli Lilly, has been found to help reduce heart failure risks, affecting consumer choices. However, Coca-Cola reported strong second-quarter earnings on Tuesday, driven by robust global demand for its beverages, leading the company to raise its full-year guidance.
“We are encouraged with our second-quarter results, which delivered solid topline and operating income growth in an ever-changing landscape,” said James Quincey, CEO of Coca-Cola.
Despite the strong overall performance, volume sales in North America declined by 1% during the quarter. Quincey attributed this decline to reduced sales in away-from-home channels, which include water, sports drinks, coffee, tea, and soda products.
The decline was partially offset by Coca-Cola’s Fairlife milk offering and its flagship Coke product, which ranked first and second in retail sales growth during the quarter. To counteract the decline, Coca-Cola is collaborating with food chains, including McDonald’s, to incorporate its soda into meal deals, such as the $5 meal deal that includes a soft drink.
Overall, Coca-Cola exceeded Wall Street’s expectations, reporting $12.4 billion in revenue, or approximately $0.84 per share, compared to the forecasted $11.76 billion, or about $0.81 per share, according to FactSet.
The company has now revised its forecast for organic revenue growth to between 9% and 10%, up from its previous prediction of 8% to 9%.
Similarly, Pepsi has faced challenges attracting U.S. consumers, who are increasingly seeking products that align with weight loss and healthier lifestyle choices. According to a Gallup poll, young adults in the U.S. are consuming significantly less alcohol than before. In early July, Pepsi attributed its subdued second-quarter performance to a series of recalls.