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Can PepsiCo's Zero-Sugar Strategy Strengthen Beverage Demand?
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Key Takeaways
PepsiCo's zero-sugar strategy is gaining traction, with key brands capturing value and volume share in 2026.
Zero-sugar offerings, functional hydration and flavored soft drinks drove sequential volume improvement in Q3.
PEP's soft drink performance still trails category trends, while shares rose 2.6% versus the industry's 7.2%.
PepsiCo, Inc. (PEP - Free Report) is sharpening its focus on zero-sugar beverages to capture evolving consumer preferences and strengthen demand across its North American beverage portfolio. The company is prioritizing zero-sugar offerings, flavored carbonated soft drinks and functional hydration as key growth avenues. These initiatives are intended to improve consumer engagement, expand consumption occasions and reinforce PepsiCo's competitive position in the beverage market.
PepsiCo's zero-sugar strategy is showing encouraging traction. In the third quarter of 2026, PepsiCo Beverages North America reported sequential improvement in organic volume trends, supported by functional hydration and flavored carbonated soft drinks. Zero-sugar and flavored varieties have continued to perform well, with Pepsi Zero Sugar, Mountain Dew Zero Sugar, Pepsi Wild Cherry & Cream, Mountain Dew Baja Cabo Citrus and Mug Root Beer gaining both value and volume share through the end of third-quarter 2026.
Beyond traditional carbonated beverages, PepsiCo is expanding its better-for-you beverage portfolio through innovations such as Gatorade Lower Sugar, which contains no artificial flavors, sweeteners or colors. The product gained value and volume share in the quarter, reinforcing the company's focus on evolving consumer needs.
PepsiCo is also extending zero-sugar offerings across away-from-home channels while prioritizing targeted innovation, stronger brand communications and broader distribution. However, its overall carbonated soft drink performance continues to trail category trends, highlighting the need for further improvement.
Looking ahead, sustained innovation and effective marketing execution could help PepsiCo translate zero-sugar momentum into stronger beverage demand and improved market competitiveness.
Are Peers Also Embracing Zero-Sugar Strategies?
As PepsiCo expands its zero-sugar beverage portfolio to capitalize on evolving consumer preferences, peers The Coca-Cola Company (KO - Free Report) and Monster Beverage Corporation (MNST - Free Report) are also focusing on low- and no-sugar offerings to strengthen their competitive positions and drive beverage demand.
Coca-Cola is leveraging its zero-sugar portfolio to attract consumers and strengthen beverage demand. In the third quarter of 2026, Coca-Cola Zero Sugar delivered double-digit growth in North America, supporting Trademark Coca-Cola's momentum. The company also accelerated Zero Sugar volume growth in Japan and introduced Coca-Cola Zero Zero in Thailand. These initiatives, alongside localized marketing and innovation, are helping Coca-Cola recruit consumers and expand growth opportunities across markets.
Monster Beverage is capitalizing on rising zero-sugar energy drink demand to strengthen sales growth and market share. In third-quarter 2026, its Ultra brand family recorded 19% dollar sales growth in the United States and 42% growth in EMEA. Monster Beverage also held a 46% value share of Europe's zero-sugar energy drink segment. Continued innovation, including the planned Monster Energy McLaren Zero Sugar launch in 2027, should support further demand.
PEP’s Price Performance, Valuation & Estimates
Shares of PepsiCo have gained 2.6% in the past three months compared with the industry’s growth of 7.2%.
Image Source: Zacks Investment Research
From a valuation standpoint, PEP trades at a forward price-to-earnings ratio of 16.42X compared with the industry’s average of 20.4X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for PEP’s 2026 and 2027 earnings per share (EPS) implies year-over-year rallies of 3.4% and 2.6%, respectively. Estimates for 2026 and 2027 have moved south in the past 30 days.
View the Zacks #1 Rank List
Image: Bigstock
Can PepsiCo's Zero-Sugar Strategy Strengthen Beverage Demand?
Key Takeaways
PepsiCo, Inc. (PEP - Free Report) is sharpening its focus on zero-sugar beverages to capture evolving consumer preferences and strengthen demand across its North American beverage portfolio. The company is prioritizing zero-sugar offerings, flavored carbonated soft drinks and functional hydration as key growth avenues. These initiatives are intended to improve consumer engagement, expand consumption occasions and reinforce PepsiCo's competitive position in the beverage market.
PepsiCo's zero-sugar strategy is showing encouraging traction. In the third quarter of 2026, PepsiCo Beverages North America reported sequential improvement in organic volume trends, supported by functional hydration and flavored carbonated soft drinks. Zero-sugar and flavored varieties have continued to perform well, with Pepsi Zero Sugar, Mountain Dew Zero Sugar, Pepsi Wild Cherry & Cream, Mountain Dew Baja Cabo Citrus and Mug Root Beer gaining both value and volume share through the end of third-quarter 2026.
Beyond traditional carbonated beverages, PepsiCo is expanding its better-for-you beverage portfolio through innovations such as Gatorade Lower Sugar, which contains no artificial flavors, sweeteners or colors. The product gained value and volume share in the quarter, reinforcing the company's focus on evolving consumer needs.
PepsiCo is also extending zero-sugar offerings across away-from-home channels while prioritizing targeted innovation, stronger brand communications and broader distribution. However, its overall carbonated soft drink performance continues to trail category trends, highlighting the need for further improvement.
Looking ahead, sustained innovation and effective marketing execution could help PepsiCo translate zero-sugar momentum into stronger beverage demand and improved market competitiveness.
Are Peers Also Embracing Zero-Sugar Strategies?
As PepsiCo expands its zero-sugar beverage portfolio to capitalize on evolving consumer preferences, peers The Coca-Cola Company (KO - Free Report) and Monster Beverage Corporation (MNST - Free Report) are also focusing on low- and no-sugar offerings to strengthen their competitive positions and drive beverage demand.
Coca-Cola is leveraging its zero-sugar portfolio to attract consumers and strengthen beverage demand. In the third quarter of 2026, Coca-Cola Zero Sugar delivered double-digit growth in North America, supporting Trademark Coca-Cola's momentum. The company also accelerated Zero Sugar volume growth in Japan and introduced Coca-Cola Zero Zero in Thailand. These initiatives, alongside localized marketing and innovation, are helping Coca-Cola recruit consumers and expand growth opportunities across markets.
Monster Beverage is capitalizing on rising zero-sugar energy drink demand to strengthen sales growth and market share. In third-quarter 2026, its Ultra brand family recorded 19% dollar sales growth in the United States and 42% growth in EMEA. Monster Beverage also held a 46% value share of Europe's zero-sugar energy drink segment. Continued innovation, including the planned Monster Energy McLaren Zero Sugar launch in 2027, should support further demand.
PEP’s Price Performance, Valuation & Estimates
Shares of PepsiCo have gained 2.6% in the past three months compared with the industry’s growth of 7.2%.
Image Source: Zacks Investment Research
From a valuation standpoint, PEP trades at a forward price-to-earnings ratio of 16.42X compared with the industry’s average of 20.4X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for PEP’s 2026 and 2027 earnings per share (EPS) implies year-over-year rallies of 3.4% and 2.6%, respectively. Estimates for 2026 and 2027 have moved south in the past 30 days.
Image Source: Zacks Investment Research
PepsiCo currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.