In the United States, consumers are increasingly opting for weight loss medications and non-alcoholic beverages, leading to a slowdown in soda purchases. This shift comes amidst McDonald’s facing its first lawsuit related to an E. coli outbreak linked to its Quarter Pounder.
Despite these challenges, Coca-Cola reported strong earnings for the second quarter, driven by robust global demand for its beverages, prompting the company to raise its full-year forecasts. CEO James Quincey expressed optimism about the results, noting solid growth in revenue and operating income in a shifting market.
However, Coca-Cola experienced a 1% decline in volume sales in North America during the quarter, attributed to lower sales in “away-from-home” channels, which encompass beverages like water, sports drinks, coffee, tea, and sodas. This decline was somewhat mitigated by sales of Fairlife milk and the company’s flagship Coca-Cola products, which ranked high in retail sales growth.
To combat declining soda sales, Quincey mentioned that Coca-Cola is collaborating with food chains, including McDonald’s, to integrate its drinks into combo meal offers. McDonald’s is reported to be working with Coca-Cola to enhance its $5 meal deal, which includes a soft drink.
Overall, Coca-Cola outperformed analysts’ expectations, generating $12.4 billion in revenue for the quarter, translating to approximately $0.84 per share. Analysts had predicted revenue of $11.76 billion, roughly $0.81 per share. The company has now revised its outlook for organic revenue growth to between 9% and 10%, up from the previous estimate of 8% to 9%.
Pepsi, like Coca-Cola, has faced challenges in engaging U.S. consumers, who are leaning toward products that support weight loss and healthier lifestyles. A Gallup poll indicates a significant decline in alcohol consumption among young adults in the U.S. Earlier in July, Pepsi attributed its lackluster second quarter to a series of product recalls.