Weight loss medications and non-alcoholic beverages are leading consumers in the U.S. to reduce their soda purchases.
Mars, known for its M&M products, is set to acquire Kellanova, the maker of Pop-Tarts, marking one of the largest deals of the year.
Despite these market challenges, Coca-Cola reported strong earnings for the second quarter, buoyed by significant global demand for its sodas, leading the company to enhance its forecast for the year.
Coca-Cola’s CEO, James Quincey, expressed satisfaction with the second quarter’s performance, highlighting solid growth in revenue and operating income amidst a shifting marketplace.
However, the company’s North American volume sales dipped by 1% during the quarter. Quincey explained that the decline in the U.S. market was affected by weaker sales in “away-from-home channels,” which encompass products like water, sports drinks, coffee, tea, and sodas.
This decline was partially mitigated by the success of its Fairlife milk products and its iconic Coke, which ranked among the top two in retail sales growth during this period.
To counterbalance the dip in volume, Coca-Cola is collaborating with food chains to integrate its sodas into combo meals, specifically working with McDonald’s to enhance the fast food giant’s $5 meal deal that includes a soft drink.
In total, Coca-Cola surpassed Wall Street’s projections, reporting $12.4 billion in revenue, translating to about $0.84 per share, compared to analysts’ predictions of $11.76 billion in revenue and roughly $0.81 per share, according to FactSet.
The company has now raised its forecast for organic revenue growth to between 9% and 10%, up from its prior estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in capturing the interest of U.S. consumers, who are increasingly opting for products that focus on weight loss and healthier lifestyles. A recent Gallup poll indicates that young adults in the U.S. are consuming significantly less alcohol than before. Earlier this month, Pepsi attributed its lackluster second-quarter performance to a series of product recalls.