Consumers in the U.S. are increasingly delaying soda purchases due to the popularity of weight loss drugs and non-alcoholic beverage options.
McDonald’s is currently dealing with its first lawsuit related to the E. coli outbreak involving its Quarter Pounder burgers.
Despite these challenges, Coca-Cola reported strong second-quarter earnings, attributed to solid global demand for its beverages. This prompted the company to raise its projections for the full year. CEO James Quincey expressed optimism about the results, highlighting the company’s ability to achieve growth amidst changing market conditions.
However, Coca-Cola experienced a 1% decline in volume sales in North America during the quarter, mainly due to weaker performance in away-from-home channels, which encompass water, sports drinks, coffee, tea, and sodas. The sales drop was somewhat mitigated by the success of Fairlife milk and its flagship soda, Coca-Cola, which experienced significant retail sales growth.
To counteract the decline in soda consumption, Coca-Cola is collaborating with food chains to integrate its beverages into combo meals, including efforts with McDonald’s to enhance the appeal of its $5 meal deal, which includes a soda.
Overall, Coca-Cola exceeded Wall Street’s expectations, reporting $12.4 billion in revenue for the second quarter, equating to approximately $0.84 per share, surpassing forecasted figures of $11.76 billion in revenue and $0.81 per share.
The company has now forecasted organic revenue growth of 9% to 10%, an increase from the earlier estimate of 8% to 9%.
Similarly, Pepsi is experiencing difficulties in capturing the attention of U.S. consumers, who are gravitating towards products that emphasize weight loss and healthier lifestyles. A Gallup poll indicates that young adults in the U.S. are consuming significantly less alcohol than in the past. In early July, Pepsi attributed its disappointing second-quarter performance to a series of product recalls.