Weight loss medications and a preference for non-alcoholic beverages are causing a decline in soda purchases among consumers in the U.S.
In a significant business move, M&M producer Mars is set to acquire Kellanova, the company behind Pop-Tarts, in one of the year’s largest deals.
Despite the broader trend, Coca-Cola reported impressive earnings for the second quarter, fueled by strong global demand for its products, leading the company to adjust its full-year forecast upward. CEO James Quincey expressed optimism about the company’s performance, reporting growth in both revenue and operating income amid a shifting market.
However, Coca-Cola experienced a 1% drop in volume sales in North America during the same period. Quincey indicated that the decline in the U.S. was largely due to weaker performance in “away-from-home” channels, which encompass its water, sports drinks, coffee, tea, and soda segments.
This decline was somewhat mitigated by the success of its Fairlife milk and Coca-Cola soda, which ranked first and second in retail sales growth for the quarter. To combat the decreasing volume, Coca-Cola is collaborating with food chains to include its soda in combo meals, notably working with McDonald’s to enhance the fast-food chain’s $5 meal deal that features a soft drink.
Overall, Coca-Cola surpassed Wall Street expectations, registering $12.4 billion in revenue, translating to approximately $0.84 per share. Analysts had anticipated earnings of $11.76 billion, or about $0.81 per share.
The company has revised its forecast for organic revenue growth to between 9% and 10%, an increase from the previous range of 8% to 9%.
Similar to Coca-Cola, Pepsi is facing challenges in attracting U.S. consumers, who are gravitating towards options that emphasize weight loss and healthier lifestyles. A recent Gallup poll reveals that young adults in the U.S. are consuming significantly less alcohol than in the past. Additionally, Pepsi cited a series of product recalls as a factor contributing to its lackluster performance in the second quarter.