Weight loss medications and the popularity of non-alcoholic beverages have led to a decline in soda consumption among U.S. consumers.
McDonald’s is now confronting its first lawsuit connected to the E. coli outbreak from its Quarter Pounder products. Despite these challenges, Coca-Cola announced strong earnings for the second quarter, bolstered by high global demand for its beverages, and raised its full-year forecast.
James Quincey, CEO of Coca-Cola, expressed optimism about the company’s performance. He stated, “We are encouraged by our second-quarter results, which delivered solid topline and operating income growth in an ever-changing landscape.”
However, sales volumes in North America fell by 1% during the quarter. Quincey explained that this decline in the U.S. was largely due to weaker sales in away-from-home channels, impacting not just soda but also water, sports drinks, coffee, and tea.
The drop in soda sales was somewhat countered by growth in Fairlife milk and other Coca-Cola products, which ranked first and second in retail sales growth during this period. To further combat the decline, Quincey mentioned that Coca-Cola is collaborating with food chains to incorporate its sodas into combo meals, specifically working with McDonald’s on enhancing its $5 meal deal that includes a soft drink.
Despite the volume drop, Coca-Cola exceeded Wall Street’s expectations. The company reported $12.4 billion in revenue for the second quarter, or approximately $0.84 per share, surpassing analyst forecasts of $11.76 billion in revenue and $0.81 per share.
Coca-Cola has adjusted its forecast for organic revenue growth to between 9% and 10%, up from an earlier estimate of 8% to 9%.
Similarly, Pepsi is facing difficulties engaging U.S. consumers, who are increasingly opting for products that focus on weight loss and healthier lifestyles. A recent Gallup poll indicated that young adults in the U.S. are drinking significantly less alcohol than in the past. Furthermore, Pepsi attributed its lackluster second quarter to a series of product recalls.