Consumers in the U.S. are reportedly delaying soda purchases due to the rise of weight loss medications and non-alcoholic alternatives.
In the midst of this market shift, McDonald’s is grappling with its first lawsuit linked to an E. coli outbreak involving its Quarter Pounder burgers. Despite these challenges, Coca-Cola reported strong earnings for the second quarter, buoyed by high global demand for its beverages, leading the company to revise its full-year revenue outlook upward.
Coca-Cola CEO James Quincey expressed optimism about the company’s performance, highlighting solid revenue and operating income growth in a dynamic market. However, he noted a 1% decline in volume sales in North America for the quarter. Quincey attributed this downturn to reduced sales in away-from-home settings, which encompass water, sports drinks, coffee, tea, and sodas.
The decline in volume was moderated by the success of Coca-Cola’s Fairlife milk and its signature soda, which took top positions in retail sales growth. To counter the volume drop, Quincey disclosed plans to collaborate with food chains to integrate sodas into combo meals. Coca-Cola is reportedly working alongside McDonald’s to enhance the fast-food chain’s $5 meal deal that includes a soft drink.
Overall, the company surpassed Wall Street’s projections, reporting a revenue of $12.4 billion for the second quarter, equating to about $0.84 per share. Analysts had anticipated $11.76 billion in revenue, or roughly $0.81 per share, according to FactSet.
Coca-Cola now expects organic revenue growth of between 9% and 10%, an increase from its prior forecast of 8% to 9%.
Similarly, Pepsi has encountered challenges in attracting U.S. consumers who are leaning more toward health-focused products due to evolving dietary habits, particularly among young adults who are consuming less alcohol, as noted by a Gallup poll. Pepsi also attributed its subdued second-quarter performance to a series of product recalls.