Weight loss medications and a shift towards non-alcoholic beverages are causing a decline in soda sales among U.S. consumers.
In California, the introduction of a $20 minimum wage for fast food employees has reportedly not led to job losses, according to a recent study. Despite this trend, Coca-Cola reported strong second-quarter earnings on Tuesday, attributed to robust global demand for its beverages, leading the company to revise its full-year forecasts upward.
CEO James Quincey expressed optimism about the results, highlighting substantial growth in sales and operating income amid a shifting market landscape.
However, the volume of soda sold in North America experienced a 1% decline during the quarter. Quincey indicated that the drop was influenced by reduced sales in “away-from-home” channels, which encompass products like water, sports drinks, coffee, tea, and sodas.
The decline was somewhat mitigated by successful sales of Fairlife milk and a strong performance from Coke, which ranked first and second in retail sales growth for the quarter.
To counteract declining soda sales, Quincey stated that Coca-Cola is collaborating with food chains to incorporate its beverages into combo meal options. Notably, the company is reportedly working with McDonald’s to enhance its $5 meal deal that includes a soft drink.
Overall, Coca-Cola surpassed Wall Street’s expectations by reporting $12.4 billion in revenue, equating to approximately $0.84 per share, surpassing forecasts of $11.76 billion and $0.81 per share according to FactSet data.
The company has revised its forecast for organic revenue growth to between 9% and 10%, raising it from the previous expectation of 8% to 9%.
Similarly, Pepsi is facing challenges in appealing to U.S. consumers who are increasingly gravitating toward products focused on weight loss and healthier alternatives. In early July, Pepsi cited product recalls as a factor in its underwhelming performance during the second quarter.