KO's Strategic Pricing Drives Q2 Beat: What's Next for Investors?

The Coca-Cola Company's KO strong second-quarter 2025 results were driven by a strategic emphasis on pricing, offset by a 1% volume decline. The company reported 5% organic revenue growth and EPS of 87 cents, beating expectations by 3 cents. A 6% increase in price/mix, primarily from pricing actions, played a pivotal role in delivering solid revenues amid choppy market conditions, including adverse weather and consumer pressure in key regions, like India and Mexico. The company's pricing strength was particularly evident in North America and Latin America, where Coca-Cola Zero Sugar and premium innovations performed well despite softer volumes.

Coca-Cola remains confident in its ability to sustain momentum, highlighting the effectiveness of its “all-weather” strategy. Management emphasized rapid pivots and granular market-specific execution to address shifting dynamics, whether through affordability plays like refillables in Mexico or digital customer platforms in India. Strategic marketing, including campaigns like “Share a Coke” and innovative product launches such as Sprite + Tea, continues to enhance consumer engagement and drive value share, which increased for the 17th consecutive quarter.

For investors, the key takeaway is Coca-Cola’s proven ability to manage pricing intelligently while navigating global macro volatility. With refreshed guidance of 5-6% organic revenue growth and 8% EPS growth (currency-neutral), supported by strong free cash flow and margin expansion, the company is well-positioned to weather uncertainty. Continued reinvestment in capabilities, AI-driven pricing tools and robust execution across emerging and developed markets provides confidence in KO’s ability to deliver consistent, long-term shareholder value.

Smart Pricing Tactics: How PEP & KDP Are Challenging KO's Playbook

In the competitive beverage landscape, Coca-Cola’s pricing strategy faces strong challenges from key rivals like PepsiCo Inc. PEP and Keurig Dr Pepper Inc. KDP, both of which are making calculated moves to protect margins and drive growth.

PepsiCo continues to lean into its premiumization strategy, zero-sugar innovation and value-pack formats to navigate inflation and evolving consumer preferences. The company has effectively balanced price increases with brand equity, particularly through its strong performance in the Gatorade and Pepsi Zero Sugar lines, while expanding distribution across retail and foodservice channels.

Keurig Dr Pepper, on the other hand, is leveraging portfolio diversification and digital shelf analytics to refine price-pack architecture across its coffee and CSD (carbonated soft drink) segments. The company has focused on strategic pricing in single-serve coffee and enhanced retail execution in flavored sodas like Dr Pepper and Canada Dry. With a mix of value-driven offerings and data-led promotional tactics, KDP is sharpening its competitive edge, particularly in North America’s value-conscious beverage market.

The Zacks Rundown for Coca-Cola

KO’s shares have risen 11.9% year to date compared with the industry’s growth of 6.7%.

From a valuation standpoint, Coca-Cola trades at a forward price-to-earnings ratio of 22.45X, significantly higher than the industry’s 17.28X.

The Zacks Consensus Estimate for KO’s 2025 and 2026 earnings implies year-over-year growth of 3.1% and 8.3%, respectively. Earnings estimates for 2025 and 2026 have been unchanged in the past 30 days.

Coca-Cola currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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