Weight loss medications and non-alcoholic alternatives are leading many consumers in the U.S. to reduce their soda purchases.
In the midst of these changing consumer habits, McDonald’s is also facing its first lawsuit linked to the E. coli outbreak associated with its Quarter Pounder.
Despite these challenges, Coca-Cola reported strong earnings for the second quarter, fueled by robust global demand for its beverage products, and subsequently raised its outlook for the year.
Coca-Cola CEO James Quincey expressed optimism about the company’s performance, stating, “We are encouraged with our second-quarter results, which delivered solid topline and operating income growth in an ever-changing landscape.”
However, the company experienced a 1% decline in volume sales in North America during the quarter. Quincey attributed this downturn to “softness in away-from-home channels,” which cover a range of products including water, sports drinks, coffee, tea, and sodas.
This decline was somewhat mitigated by the strong performance of Fairlife milk and Coca-Cola itself, which ranked first and second in retail sales growth for the quarter. To counteract the decrease in sales, the company is collaborating with restaurant chains to incorporate its sodas into combo meal deals. Reports indicate that Coca-Cola is partnering with McDonald’s to enhance the popularity of its $5 meal deal, which includes a soft drink.
Coca-Cola exceeded Wall Street predictions, reporting $12.4 billion in revenue during the second quarter, translating to around $0.84 per share. Analysts had anticipated revenue of $11.76 billion, approximately $0.81 per share, according to FactSet.
Furthermore, the company has updated its forecast for organic revenue growth to a range of 9% to 10%, an increase from the prior estimate of 8% to 9%.
Similarly, Pepsi has also faced difficulties in engaging U.S. consumers, who are increasingly attracted to products that promote weight loss and healthier lifestyles. A Gallup poll highlights 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 performance to several recalls.