In the United States, weight loss medications and non-alcoholic beverage options are influencing consumer behavior, leading to a decrease in soda purchases.
McDonald’s has recently been hit with its first lawsuit related to the E. coli outbreak linked to its Quarter Pounder burgers. Despite this legal issue, Coca-Cola reported strong earnings for the second quarter, largely fueled by robust global demand for its products, which prompted the company to increase its full-year outlook.
Coca-Cola CEO James Quincey expressed optimism, stating that the second-quarter results demonstrated solid top-line and operating income growth amidst an ever-evolving market landscape. However, the company did experience a 1% decline in volume sales in North America during the quarter. Quincey attributed the dip in the U.S. division’s sales, particularly in “away-from-home channels” including water, sports drinks, coffee, tea, and sodas, to changing consumer habits.
Coca-Cola noted that this decline was partially counteracted by growth in its Fairlife milk brand and its flagship soda, Coke, which ranked first and second in retail sales growth, respectively, for the quarter. To combat the volume decline, Coca-Cola is collaborating with restaurant chains to incorporate its sodas into combo meal deals. Notably, there is a partnership with McDonald’s aimed at enhancing their popular $5 meal deal that includes a soft drink.
Overall, Coca-Cola exceeded Wall Street’s expectations, reporting $12.4 billion in revenue for the second quarter, translating to approximately $0.84 per share. Analysts had projected revenues of around $11.76 billion and earnings of roughly $0.81 per share.
Looking ahead, the company has revised its forecast for organic revenue growth to between 9% and 10%, an increase from the previous estimate of 8% to 9%.
Pepsi is facing similar challenges in attracting U.S. consumers who are increasingly opting for weight-loss-focused products and healthier lifestyle choices. 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 lackluster second quarter to a series of product recalls.