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Can Zero Sugar Drinks Fuel PepsiCo's Next Growth Phase?
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Key Takeaways
PepsiCo is expanding zero-sugar beverages as consumers become more health-conscious and cut added sugar.
PepsiCo can drive zero-sugar demand through product innovation, refreshed packaging and targeted marketing.
PepsiCo can use premiumization and price-pack architecture to support revenue and margin growth.
PepsiCo, Inc. (PEP - Free Report) is strengthening its beverage portfolio by focusing on non-sugar offerings as consumer preferences evolve. The performance of the non-sugar portion of its beverage business, along with functional hydration and energy, remains encouraging. These initiatives are part of PepsiCo’s broader portfolio transformation strategy aimed at catering to changing food and beverage habits while creating new growth opportunities.
The company is increasingly relying on its zero-sugar beverage portfolio to support growth as consumers become more health-conscious and reduce their intake of added sugar. Brands such as Pepsi Zero Sugar, Diet Pepsi and other low- and no-sugar offerings allow the company to address changing preferences while maintaining the appeal of its established beverage franchises.
Zero-sugar beverages can contribute to PepsiCo’s growth by catering to consumers who enjoy the taste of traditional soft drinks but prefer lower-sugar options. The company can further drive demand through product innovation, refreshed packaging and targeted marketing initiatives that enhance awareness and consumer engagement. In addition, PepsiCo’s extensive distribution network spanning convenience stores, supermarkets, restaurants and other retail channels provides broad availability for its zero-sugar offerings, helping it reach a wider consumer base.
PepsiCo can further benefit from premiumization and price-pack architecture. Offering zero-sugar beverages in different package sizes and formats can help the company address varied consumption occasions while supporting revenue and margin growth. Innovation around flavors and functional attributes could also broaden the category beyond traditional colas.
Overall, PepsiCo’s expanding zero-sugar portfolio represents an important growth lever. Combined with stronger brand execution, innovation, pricing discipline and distribution capabilities, these offerings could help the company capture evolving beverage demand and support more sustainable growth.
PEP’s Peers: How are They Doing?
The Coca-Cola Company (KO - Free Report) maintains a diversified global non-alcoholic beverage portfolio spanning carbonated soft drinks, hydration, energy, juices, dairy, coffee, tea and functional beverages. KO’s growth strategy focuses on leveraging strong brands, premiumization, zero-sugar innovation and expansion in high-growth beverage categories. Coca-Cola is also emphasizing product innovation, portfolio expansion and deeper consumer engagement to strengthen brand relevance and support sustainable growth.
Monster Beverage Corporation (MNST - Free Report) continues to benefit from the expanding global energy drinks market, supported by steady demand across convenience stores and other major retail channels. MNST is strengthening its portfolio through new flavors and health-oriented offerings while focusing on supply-chain optimization and strategic pricing. Continued category expansion and product innovation are helping Monster Beverage broaden its consumer reach and reinforce its position in the energy drinks market.
PEP’s Price Performance, Valuation and Estimates
Shares of PepsiCo have lost 12.3% in the past six months against the industry’s growth of 10.8%.
Image Source: Zacks Investment Research
From a valuation standpoint, PEP trades at a forward price-to-earnings ratio of 14.60X compared with the industry’s average of 19X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for PEP’s 2026 and 2027 earnings per share (EPS) implies a year-over-year rise of 5.3% and 4.9%, respectively. The estimates for 2026 have been stable but 2027 estimates have moved south in the past 30 days.
Image Source: Zacks Investment Research
PepsiCo stock currently carries a Zacks Rank #4 (Sell).
View the Zacks #1 Rank List
Image: Bigstock
Can Zero Sugar Drinks Fuel PepsiCo's Next Growth Phase?
Key Takeaways
PepsiCo, Inc. (PEP - Free Report) is strengthening its beverage portfolio by focusing on non-sugar offerings as consumer preferences evolve. The performance of the non-sugar portion of its beverage business, along with functional hydration and energy, remains encouraging. These initiatives are part of PepsiCo’s broader portfolio transformation strategy aimed at catering to changing food and beverage habits while creating new growth opportunities.
The company is increasingly relying on its zero-sugar beverage portfolio to support growth as consumers become more health-conscious and reduce their intake of added sugar. Brands such as Pepsi Zero Sugar, Diet Pepsi and other low- and no-sugar offerings allow the company to address changing preferences while maintaining the appeal of its established beverage franchises.
Zero-sugar beverages can contribute to PepsiCo’s growth by catering to consumers who enjoy the taste of traditional soft drinks but prefer lower-sugar options. The company can further drive demand through product innovation, refreshed packaging and targeted marketing initiatives that enhance awareness and consumer engagement. In addition, PepsiCo’s extensive distribution network spanning convenience stores, supermarkets, restaurants and other retail channels provides broad availability for its zero-sugar offerings, helping it reach a wider consumer base.
PepsiCo can further benefit from premiumization and price-pack architecture. Offering zero-sugar beverages in different package sizes and formats can help the company address varied consumption occasions while supporting revenue and margin growth. Innovation around flavors and functional attributes could also broaden the category beyond traditional colas.
Overall, PepsiCo’s expanding zero-sugar portfolio represents an important growth lever. Combined with stronger brand execution, innovation, pricing discipline and distribution capabilities, these offerings could help the company capture evolving beverage demand and support more sustainable growth.
PEP’s Peers: How are They Doing?
The Coca-Cola Company (KO - Free Report) maintains a diversified global non-alcoholic beverage portfolio spanning carbonated soft drinks, hydration, energy, juices, dairy, coffee, tea and functional beverages. KO’s growth strategy focuses on leveraging strong brands, premiumization, zero-sugar innovation and expansion in high-growth beverage categories. Coca-Cola is also emphasizing product innovation, portfolio expansion and deeper consumer engagement to strengthen brand relevance and support sustainable growth.
Monster Beverage Corporation (MNST - Free Report) continues to benefit from the expanding global energy drinks market, supported by steady demand across convenience stores and other major retail channels. MNST is strengthening its portfolio through new flavors and health-oriented offerings while focusing on supply-chain optimization and strategic pricing. Continued category expansion and product innovation are helping Monster Beverage broaden its consumer reach and reinforce its position in the energy drinks market.
PEP’s Price Performance, Valuation and Estimates
Shares of PepsiCo have lost 12.3% in the past six months against the industry’s growth of 10.8%.
Image Source: Zacks Investment Research
From a valuation standpoint, PEP trades at a forward price-to-earnings ratio of 14.60X compared with the industry’s average of 19X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for PEP’s 2026 and 2027 earnings per share (EPS) implies a year-over-year rise of 5.3% and 4.9%, respectively. The estimates for 2026 have been stable but 2027 estimates have moved south in the past 30 days.
Image Source: Zacks Investment Research
PepsiCo stock currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.