Will Coca-Cola's Coffee Bet Perk Up Its Global Beverage Sales?

The Coca-Cola Company’s KO long-standing ambition to break into the global coffee segment remains a work in progress. The company’s acquisition of Costa aimed to unlock multiple verticals, including store-based retail, ready-to-drink (RTD) formats and at-home coffee experiences. While the Costa brand has shown strength in-store, particularly in the U.K., its broader expansion into RTD and vending solutions has not delivered at the pace the company had hoped.

Management acknowledged that the investment hypothesis has not fully materialized, with much of Costa’s growth still concentrated in physical locations rather than diversified platforms.

That said, Coca-Cola is not backing off on the coffee opportunity. With the category being large, fragmented and still growing globally, the company is reassessing its strategy. Management emphasized the importance of reflecting on past learnings and exploring avenues for expansion. Despite underperformance relative to expectations, Costa remains a profitable and strategically important brand. Coca-Cola has focused on affordability, store refreshment and speed of service to stabilize Costa’s performance while it works on longer-term transformation initiatives.

Looking ahead, KO is likely to pursue a more measured and insight-driven approach to coffee. With the beverage giant already boasting $30-billion brands and a deep innovation pipeline, Costa’s transformation will hinge on its ability to tap into global consumption trends and leverage Coca-Cola’s system capabilities. While the coffee bet has not perked up global sales meaningfully, it remains a strategic growth lever with untapped potential if execution aligns with evolving consumer behavior.

KO’s Peers Deepen Coffee Ambitions: PEP & KDP Step Up Their Game

Apart from Coca-Cola, PepsiCo Inc. PEP and Keurig Dr Pepper Inc. KDP have been steadily brewing their presence in the global coffee arena, each leveraging unique brand partnerships and distribution strengths to tap into the high-growth category.

PepsiCo’s coffee presence remains limited, with no direct updates in its second-quarter 2025 remarks regarding new coffee-specific products or partnerships. While PEP continues to see strong growth across segments like zero-sugar sodas, functional hydration and prebiotic beverages like poppi, coffee is not yet a core focus. However, with an emphasis on expanding in fast-growing beverage categories and improving channel presence, PepsiCo can still explore selective coffee innovations or partnerships in the future.

Keurig Dr Pepper’s coffee business showed sequential improvement in second-quarter 2025, led by better pod pricing and resilient volume trends. While brewer shipments remained pressured due to tight retailer inventory, point-of-sale consumption was stable. The company is expanding into premium and cold segments, with Lavazza dessert-inspired K-Cups and La Colombe RTD coffee gaining traction. Though near-term performance faces cost and tariff headwinds, KDP remains focused on long-term growth via innovation and next-gen systems.

The Zacks Rundown for Coca-Cola

KO shares have risen 10.9% year to date compared with the industry’s growth of 3.7%.

From a valuation standpoint, Coca-Cola trades at a forward price-to-earnings ratio of 22.11X, significantly higher than the industry’s 17.39X.

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 have been unchanged in the past 30 days.

Coca-Cola currently carries a Zacks Rank #3 (Hold). 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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