Consumers in the U.S. are opting for weight loss drugs and non-alcoholic beverages, resulting in a slowdown in soda purchases. McDonald’s is currently facing its first lawsuit linked to an E. coli outbreak related to its Quarter Pounder.
Despite these challenges, Coca-Cola reported strong second-quarter earnings, buoyed by robust global demand for its beverages, which has led the company to revise its full-year projections upward. CEO James Quincey expressed optimism regarding the quarter’s results, highlighting notable growth in both revenue and operating income amidst a shifting marketplace.
However, North America saw a 1% decrease in volume sales during this quarter. Quincey attributed this decline to reduced demand in “away-from-home channels,” which consist of water, sports drinks, coffee, tea, and sodas. This dip was somewhat counterbalanced by the success of Coca-Cola’s Fairlife milk line and its flagship soda, which ranked first and second in retail sales growth, respectively.
To address the sales decline, Coca-Cola is collaborating with food chains to incorporate its sodas into combo meal offerings. Reports suggest that the beverage giant is working with McDonald’s to enhance the appeal of its $5 meal deal, which includes a soft drink.
Coca-Cola’s second-quarter revenue reached $12.4 billion, translating to approximately $0.84 per share, surpassing Wall Street expectations. Analysts had anticipated revenues of about $11.76 billion, or roughly $0.81 per share.
The company has adjusted its forecast for organic revenue growth to between 9% and 10%, an increase from the earlier estimate of 8% to 9%.
Similar to Coca-Cola, Pepsi is facing difficulties in capturing the interest of U.S. consumers, who are leaning more towards products that support weight management and healthier lifestyles. A Gallup poll indicates that young adults in the U.S. are drinking less alcohol than in previous years. In early July, Pepsi attributed its lackluster second-quarter performance to a series of product recalls.