Weight-loss medications and non-alcoholic alternatives are causing U.S. consumers to delay purchasing sodas.
Amid these shifts, McDonald’s is facing its first lawsuit linked to the recent E. coli outbreak associated with its Quarter Pounder burgers.
Despite these challenges, Coca-Cola announced strong second-quarter earnings, benefiting from high global demand for its beverages, prompting the company to raise its full-year expectations. CEO James Quincey expressed optimism about the company’s performance, noting solid growth in revenue and operating income amid diverse market conditions.
However, Coca-Cola experienced a 1% decline in volume sales in North America during the same quarter. Quincey attributed this dip to reduced sales in “away-from-home channels,” which include products like water, sports drinks, coffee, tea, and soda. Nonetheless, this decline was somewhat mitigated by the success of its Fairlife milk and Coca-Cola’s own products, which ranked first and second in retail sales growth during the quarter.
To counteract the sales downturn, Coca-Cola is collaborating with restaurant chains to incorporate its sodas into meal deals. Reports suggest that the company is working with McDonald’s to enhance its $5 meal deal, which includes a soft drink.
Overall, Coca-Cola’s performance surpassed Wall Street expectations, with reported revenue of $12.4 billion, or approximately $0.84 per share, compared to analysts’ predictions of $11.76 billion and $0.81 per share.
Looking ahead, Coca-Cola has adjusted its forecast for organic revenue growth to between 9% and 10%, up from a prior estimate of 8% to 9%.
Similarly, Pepsi is also finding it challenging to engage U.S. consumers, who are increasingly focused on weight loss and healthier lifestyle choices. A Gallup poll highlights that younger Americans are consuming significantly less alcohol than in the past. In early July, Pepsi attributed its lackluster second-quarter performance to a series of product recalls.