Beverage Industry Shifts: What Coca-Cola Must Do to Stay Ahead

The global beverage industry is undergoing a significant transformation, driven by rising health awareness, evolving consumer preferences and constant technological advancements. Accordingly, The Coca-Cola Company KO is redefining its beverage portfolio by expanding beyond traditional sodas to become a total beverage company. 

Coca-Cola is emphasizing healthier options, low and no-sugar products, categories like energy drinks and coffee, and beverages with functional ingredients. Coca-Cola has been proactive in expanding products, like Coca-Cola Zero Sugar, Diet Coke and fairlife dairy-based beverages, all of which delivered strong growth in second-quarter 2025. These brands reflect the global move toward reduced sugar and added nutritional value, while catering to rising consumer expectations for healthier choices. 

Innovation remains a central component of Coca-Cola’s growth strategy. The company has launched Sprite + Tea in North America, contributing to a higher share of visible inventory. This innovation combines the refreshing taste of Sprite with the flavor of tea, building on recent successes under the Sprite trademark, such as Sprite Chill, Sprite Winter Spiced Cranberry and Sprite Lemonade.

Initiatives like the continued expansion of Coca-Cola Creations and digital-first campaigns under the "Real Magic" platform helped drive consumer engagement and brand differentiation. As such, Coca-Cola is evolving into a total beverage company with a resilient, all-weather strategy that integrates marketing, innovation and revenue growth management. To remain competitive, Coca-Cola must transition from a carbonated soft drink giant to a total beverage leader, striking a balance between its heritage and trending, health-focused innovations.

KO’s Competition in the Evolving Beverage Trends

PepsiCo, Inc. PEP and Monster Beverage Corporation MNST are the key beverage companies competing with Coca-Cola.

PepsiCo, a leading beverage company and Coca-Cola’s key competitor. PEP is benefiting from investments in brands and go-to-market systems.  The company has consistently evolved its portfolio to align with shifts in consumer preferences toward health, functionality and value. PEP’s beverage strategy highlights growth areas like zero-sugar, functional hydration and sports nutrition, while acquisitions like poppi add modern, health-forward sodas that resonate with younger demographics.

Monster Beverage places a strong emphasis on driving innovations with the evolving trends. Monster Beverage offers non-carbonated, ready-to-drink iced teas, energy drinks, juice cocktails, single-serve juices, lemonades and fruit beverages, ready-to-drink dairy and coffee drinks, sports drinks and single-serve still waters (flavored, unflavored and enhanced) with ‘new age’ beverages, consisting of sodas considered as natural, sparkling juices and flavored sparkling beverages. MNST continues to diversify its portfolio around functional, lifestyle-oriented beverages that align with shifting consumer needs.

KO’s Price Performance, Valuation and Estimates

Shares of Coca-Cola have gained 7.1% year to date compared with the industry’s growth of 1.3%.

From a valuation standpoint, KO trades at a forward price-to-earnings ratio of 21.11X compared with the industry’s average of 17.37X.

The Zacks Consensus Estimate for KO’s 2025 and 2026 earnings per share (EPS) implies year-over-year growth of 3.1% and 8.2%, respectively. The estimates for 2025 and 2026 have been stable in the past 30 days.

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

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