Weight loss medications and non-alcoholic alternatives are causing U.S. consumers to hesitate before purchasing sodas. Meanwhile, McDonald’s is contending with its first lawsuit linked to the E. coli outbreak connected to its Quarter Pounder.
Despite these challenges, Coca-Cola reported strong second-quarter earnings, buoyed by high global demand for its beverages, prompting the company to raise its full-year outlook. CEO James Quincey expressed optimism about the results, highlighting solid growth in revenue and operating income amid a changing market.
In North America, however, Coca-Cola experienced a 1% decline in volume sales during the quarter. Quincey attributed this downturn to lower sales in “away-from-home channels,” which encompass water, sports drinks, coffee, tea, and soda products. This decline was somewhat offset by the success of its Fairlife milk brand and its flagship soda, Coca-Cola, which ranked first and second in retail sales growth, respectively.
To combat the decrease, Quincey mentioned that Coca-Cola is collaborating with food chains to integrate its sodas into combo meals. The company is reportedly assisting McDonald’s in enhancing its $5 meal deal, which includes a soft drink.
Overall, Coca-Cola surpassed Wall Street’s expectations, posting $12.4 billion in revenue for the second quarter, equating to approximately $0.84 per share. Analysts had anticipated revenues of about $11.76 billion, or approximately $0.81 per share.
Coca-Cola has now raised its forecast for organic revenue growth to between 9% and 10%, an increase from its earlier estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in grabbing the attention of U.S. consumers, who are leaning more towards products that focus on weight loss and healthier lifestyles. A Gallup poll indicates that young adults in the U.S. are consuming significantly less alcohol than before. Pepsi, in early July, attributed its lackluster second quarter to a series of product recalls.