Consumers in the U.S. are delaying soda purchases due to the presence of weight loss drugs and non-alcoholic alternatives.
In the meantime, McDonald’s is encountering its first lawsuit related to an E. coli outbreak linked to its Quarter Pounder sandwiches. Despite these challenges, Coca-Cola reported strong earnings for the second quarter on Tuesday, buoyed by solid global demand for its beverages, leading the company to increase its full-year forecasts.
James Quincey, Coca-Cola’s CEO, expressed optimism about the company’s quarterly performance, stating that it reflected positive growth despite a fluctuating market environment. However, Coca-Cola experienced a 1% decline in volume sales in North America during this period. Quincey attributed the downturn in the U.S. to weakness in “away-from-home channels,” which encompass products such as water, sports drinks, coffee, tea, and sodas.
This dip was somewhat mitigated by the success of Fairlife milk and the performance of Coca-Cola itself, which ranked first and second, respectively, in retail sales growth within the quarter. To counterbalance the decline, Quincey mentioned that Coca-Cola is collaborating with food chains to include its sodas in combo meals. Notably, the beverage giant is partnering with McDonald’s to enhance its $5 meal deal that features a soft drink.
Coca-Cola’s second-quarter revenue reached $12.4 billion, translating to approximately $0.84 per share, surpassing Wall Street’s expectations of $11.76 billion and around $0.81 per share, according to FactSet. The company has now revised its organic revenue growth forecast to between 9% and 10%, an increase from the previous estimate of 8% to 9%.
Similarly, PepsiCo has faced challenges in attracting U.S. consumers who are increasingly favoring products that focus on weight loss and healthier lifestyle choices. A Gallup poll indicated that young adults in the U.S. are consuming significantly less alcohol than in the past. Earlier in July, Pepsi also attributed its lackluster second quarter to a series of product recalls.