Weight loss medications and non-alcoholic alternatives are causing delays in soda purchases among consumers in the U.S.
Mars, the company behind M&M’s, is set to acquire Kellanova, known for its Pop-Tarts, in one of the year’s notable acquisitions.
In the midst of these industry changes, Coca-Cola reported strong earnings for the second quarter, primarily supported by robust global demand for its beverages, leading the company to revise its full-year projections upwards.
James Quincey, CEO of Coca-Cola, expressed optimism about the company’s performance, stating, “We are encouraged with our second-quarter results, which delivered solid topline and operating income growth in an ever-changing landscape.”
However, the North American market saw a 1% decline in volume sales during this period. Quincey attributed this downturn to weaker sales in venues outside the home, which includes water, sports drinks, coffee, tea, and soda.
Despite this, Coca-Cola noted that its Fairlife milk and its flagship Coke brand helped mitigate some sales losses, with Coke ranking first and second in retail sales growth.
To counterbalance the downturn, Coca-Cola is collaborating with food chains to incorporate its beverages into combo meals, including efforts with McDonald’s to enhance its $5 meal deal that features a soft drink.
Coca-Cola exceeded analyst expectations by reporting $12.4 billion in revenue for the second quarter, translating to about $0.84 per share. This surpassed the forecasted revenue of $11.76 billion, or roughly $0.81 per share, according to FactSet.
The company has revised its organic revenue growth forecast to between 9% and 10%, an increase from its earlier estimate of 8% to 9%.
Similarly, Pepsi has faced challenges in gaining traction with U.S. consumers, who are increasingly gravitating towards products that emphasize weight management and healthier lifestyles. A Gallup poll indicates that young adults in the U.S. are consuming significantly less alcohol than in the past. In early July, Pepsi attributed its subdued second-quarter performance to a series of product recalls.