The Zacks Beverages – Soft Drinks industry presents a dynamic investment landscape, marked by a blend of strong growth potential and ongoing cost challenges. Rising consumer demand for healthier, functional and eco-friendly beverages is unlocking new avenues for market expansion, prompting companies to innovate and diversify their portfolios. Additionally, the industry is undergoing a digital evolution as brands increasingly adopt direct-to-consumer channels, subscription models and data-driven personalization to deepen customer relationships and unlock incremental revenue streams.

However, prospective investors must consider the industry's persistent headwinds, including elevated input costs, ongoing supply-chain disruptions, and tariff-related uncertainties that continue to pressure margins. Rising packaging and freight expenses, along with volatile commodity prices, pose challenges to profitability. Despite these hurdles, leading players like The Coca-Cola Company (KO Quick QuoteKO - Free Report) , Monster Beverage Corporation (MNST Quick QuoteMNST - Free Report) , Keurig Dr Pepper Inc. (KDP Quick QuoteKDP - Free Report) , Primo Brands Corporation (PRMB Quick QuotePRMB - Free Report) and Zevia (ZVIA Quick QuoteZVIA - Free Report) are well-equipped to navigate these complexities. Through a blend of continuous innovation, digital transformation and disciplined operational execution, these companies are positioned to thrive in a rapidly evolving and competitive market landscape.

About the Industry

The Zacks Beverages - Soft Drinks industry comprises companies that manufacture, source, develop, market and sell non-alcoholic beverages. Soft drinks mainly include sparkling drinks, natural juices, enhanced water, sports and energy drinks, dairy, and RTD tea and coffee beverages. Some industry players like PepsiCo produce and sell handy food with flavored snacks, complementing their beverage portfolio. The companies sell products through a network of wholesalers and retailers, including supermarkets, department stores, mass merchandisers, club stores and other retail outlets. Some also offer products via company-owned or controlled bottling, independent bottling partners and partner brand owners.

What's Shaping the Future of the Beverages - Soft Drinks Industry?

Shifting Consumer Preferences: The U.S. soft drinks industry is experiencing a surge in demand for healthier beverage options as consumers increasingly prioritize wellness. This shift has fueled interest in drinks made with natural ingredients, reduced sugar and functional benefits while driving demand for diverse flavors and enhanced taste experiences. Plant-based beverages, including botanical-infused drinks and non-dairy alternatives, are gaining traction among health-conscious consumers seeking sustainable choices. Meanwhile, functional beverages that promote hydration, energy and mood support are carving out a strong market presence. To capitalize on these trends, companies are expanding into new and adjacent categories, such as the booming ready-to-drink (RTD) alcoholic beverage sector, often through partnerships and innovation.

Digital Growth & Innovation: The U.S. soft drinks industry is leveraging digital transformation to fuel growth and enhance consumer engagement. With rising demand for online shopping, brands are investing in direct-to-consumer platforms and third-party marketplaces to strengthen their digital presence. Companies are also optimizing fulfillment strategies, expanding digital offerings, and introducing subscription-based models to boost customer loyalty and secure recurring revenue. Beyond digital advancements, product innovation remains a key growth driver. Brands are refining portfolios, launching products and entering untapped markets to expand their reach. By leveraging technology and innovation, the industry is evolving to stay competitive in an increasingly digital and dynamic landscape.

Rising Costs & Tariff Uncertainty: The beverage industry is facing mounting cost pressures due to raw material shortages, soaring commodity prices and logistical disruptions. Rising expenses for key inputs like steel and aluminum have significantly increased packaging costs, while supply-chain bottlenecks and freight inefficiencies add strain. Newly imposed U.S. tariffs are creating uncertainty and additional financial pressure. The government’s 25% tariffs on imports from Canada and Mexico escalate trade tensions and may disrupt supply chains. These cost burdens could squeeze margins, complicate pricing strategies, and impact overall industry competitiveness.

Zacks Industry Rank Indicates Bright Prospects

The Zacks Beverages - Soft Drinks industry is housed within the broader Consumer Staples sector. It currently carries a Zacks Industry Rank #63, which places it in the top 26% of more than 250 Zacks industries.

The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates bright near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

The industry’s positioning in the top 50% of the Zacks-ranked industries results from a positive aggregate earnings outlook for the constituent companies. Looking at the aggregate earnings estimate revisions, it appears that analysts are gradually gaining confidence in this group’s earnings growth potential.

Before we present a few stocks that you may want to consider for your portfolio, let us look at the industry’s recent stock-market performance and valuation picture.

Industry vs. Broader Market

The Zacks Beverages – Soft Drinks industry has underperformed the Consumer Staples sector and the S&P 500 Index in the past year.

The stocks in the industry have collectively grown 0.4% compared with the sector’s rise of 3.5% in the past year. Meanwhile, the S&P 500 has rallied 11.9%.

One-Year Price Performance

Industry's Current Valuation

On the basis of the forward 12-month price-to-earnings (P/E) ratio, commonly used for valuing soft drink stocks, the industry is currently trading at 18.68X compared with the S&P 500’s 21.97X and the sector’s 17.75X.

Over the last five years, the industry traded as high as 23.8X and as low as 17.22X, with a median of 21.45X, as the chart below shows.

Price-to-Earnings Ratio (Past 5 Years)

5 Soft Drink Stocks to Watch

None of the stocks in the Zacks Beverages – Soft Drinks industry currently sports a Zacks Rank #1 (Strong Buy), whereas two stocks have a Zacks Rank #2 (Buy). We have also highlighted three stocks with a Zacks Rank #3 (Hold) from the same industry. You can see the complete list of today’s Zacks #1 Rank stocks here.

Let us take a look.

Coca-Cola: The soft drink behemoth is poised to gain from strategic transformation and ongoing worldwide recovery. The streamlining of its portfolio and accelerating investments to expand the digital presence position the company for long-term growth. It has been witnessing a splurge in e-commerce, with the growth rate of the channel doubling in many countries. KO is strengthening consumer connections and piloting numerous digital-enabled initiatives through fulfillment methods to capture the online demand for at-home consumption.

KO is diversifying its portfolio to tap into the rapidly growing RTD category. Coca-Cola has been gaining from the elasticity in the marketplace, an improved price/mix, and concentrated sales and underlying share gains in at-home and away-from-home channels. The Zacks Consensus Estimate for KO’s 2025 sales and earnings suggests year-over-year growth of 2.4% and 2.8%, respectively. The consensus mark for earnings has been unchanged in the past 30 days. The Zacks Rank #2 company’s shares have gained 12.2% in the past year.

Price & Consensus: KO

Zevia: This is a mission-driven beverage company focused on offering zero-sugar, naturally sweetened drinks made with plant-based ingredients. Its portfolio spans sodas, energy drinks, teas, mixers and kids' beverages — all free from artificial sweeteners and additives. Zevia operates with a strong commitment to health, transparency and sustainability, appealing to increasingly health-conscious consumers. The company is sharpening its operations through SKU optimization, cost efficiencies and streamlined inventory practices. Its growth strategy includes expanding retail distribution across major national chains, increasing brand visibility through bold marketing campaigns, and continuously launching innovative flavors and product formats to drive trial and engagement.

The stock of this Encino, CA-based soft-drink company has skyrocketed 196.7% in the past year. The Zacks Consensus Estimate for ZVIA’s 2025 sales and earnings suggests year-over-year growth of 3.4% and 38.7%, respectively. The consensus estimate for this Zacks Rank #2 company’s 2025 loss per share has narrowed significantly in the past 30 days.

Price & Consensus: ZVIA

Monster Beverage: The Corona, CA-based company markets and distributes energy drinks and alternative beverages. MNST has been experiencing continued strength in its energy drinks category, which is driving its performance. The company offers a wide range of energy drink brands, such as Monster Energy, Java Monster, Cafe Monster, Espresso Monster, Monster Energy Mule, Juice Monster Pipeline Punch, Juice Monster Pacific Punch, Juice Monster Mango Loco, Monster Ultra Paradise and Monster Hydra Sport. Product innovation also plays a significant role in the company's success. Monster Beverage is implementing pricing actions to overcome the ongoing cost pressure.

Despite the unending supply-chain challenges, MNST continues to stand by its strategy to ensure product availability and solidify long-term growth of its brands. Management is optimistic about strength in the global energy drinks category. It has been poised to gain from growth in the Monster Energy family of brands, and strength in Strategic and Affordable energy brands. Shares of this Zacks Rank #3 company have rallied 24.3% in the past year. The Zacks Consensus Estimate for MNST’s 2025 sales and earnings indicates year-over-year increases of 5.9% and 14.8%, respectively. The consensus mark for earnings has moved up 1.1% in the past 30 days.

Price & Consensus: MNST

Keurig Dr Pepper: The beverage and coffee company in the United States and Canada is poised to gain from continued momentum in the Refreshment Beverages segment and solid market share growth. KDP's consumer-centric innovation model, portfolio expansion into high-growth categories and solid route-to-market capabilities appear encouraging. These endeavors are supported by the constant focus on cost efficiency and capital discipline. The company’s International segment is also performing well.

The Zacks Consensus Estimate for KDP’s 2025 sales and earnings suggests growth of 5.6% and 6.3%, respectively. The consensus mark for earnings has been unchanged in the past 30 days. The company’s shares have declined 4.1% in the past year. It currently has a Zacks Rank #3.

Price & Consensus: KDP

Primo Brands: This is a top North American beverage company specializing in healthy hydration. It offers responsibly sourced, diverse products across various formats, channels and price points, catering to different consumer needs. With distribution in the United States and Canada, Primo Brands ensures broad accessibility and quality across its portfolio. The company’s commitment to key priorities — brand leadership, organic growth, exceptional customer service, operational excellence and stakeholder trust — fuels its success and value creation.

PRMB’s strong brands, market share expansion and superior service continue to drive sustained momentum and long-term growth. Primo Brands’ shares have jumped 37.9% in the past year. The Zacks Consensus Estimate for PRMB’s 2025 sales and earnings indicates year-over-year increases of 145.6% and 52.5%, respectively. The consensus mark for earnings has moved up 26.8% in the past 30 days. The company currently has a Zacks Rank #3.

Price & Consensus: PRMB