North America Beverage Surge: Will PepsiCo Sustain Its Growth Streak?

PepsiCo, Inc.’s PEP North America beverage segment delivered a strong third-quarter 2025 performance, marking a notable acceleration in momentum and signaling renewed consumer engagement across key brands. The company achieved 2% organic revenue growth despite a challenging macroeconomic environment and lingering volume pressures in certain categories. Growth was driven by the continued success of Pepsi Zero Sugar, Mountain Dew flavor extensions and the fast-expanding functional hydration brand Propel — all supported by innovative marketing campaigns such as “Food Deserves Pepsi.” This diversified brand strength, coupled with portfolio reshaping efforts and the integration of modern beverages like poppi, reflects PepsiCo’s agility in adapting to evolving consumer preferences.

However, the sustainability of this growth remains tied to PepsiCo’s ability to balance pricing discipline with volume expansion. While premiumization and innovation have helped offset cost headwinds, higher price points have tested consumer affordability in North America. The company’s transition away from its case-pack water business and tariff-related cost pressures also presented near-term challenges. To mitigate these, PepsiCo has leaned into revenue management, optimized its price-pack architecture and invested in more accessible pack sizes to maintain value perception. These strategic adjustments are aimed at retaining loyal consumers while appealing to budget-conscious shoppers, a critical factor as competition in the beverage sector intensifies.

PepsiCo’s focus on permissible, functional and experiential beverages could drive sustained growth in the North American market. The upcoming launches of products like Pepsi Prebiotic, Gatorade Lower Sugar and Propel Protein Water underscore the company’s commitment to health-driven innovation.

How Are KO & KDP Navigating North America’s Beverage Market?

Amid a competitive and price-sensitive North American beverage market, both The Coca-Cola Company KO and Keurig Dr Pepper Inc. KDP are leveraging innovation, pricing discipline and portfolio diversification to sustain growth and defend market share.

In North America, Coca-Cola continues to post steady revenue gains supported by strong pricing execution and an evolving product mix that caters to shifting consumer preferences. The company’s focus on expanding zero-sugar offerings, functional beverages and energy drinks has helped sustain demand despite a softer volume environment in traditional carbonated categories. Coca-Cola Zero Sugar and Monster Energy remain standout performers, while smaller pack sizes and affordable price points are helping to preserve household penetration amid inflationary pressures.

Keurig Dr Pepper’s North America business continues to benefit from a diversified portfolio spanning carbonated soft drinks, ready-to-drink coffee and single-serve pods, though the segment faces modest volume pressures due to elevated pricing and slower consumer demand. The company’s key beverage brands, including Dr Pepper, Canada Dry and Snapple, have held up well, driven by effective price-pack architecture and strong in-store execution. In the coffee segment, KDP is working to revitalize growth through innovations in premium and sustainable pods while expanding its partnerships with leading retailers.

PEP’s Price Performance, Valuation & Estimates

Shares of PepsiCo have gained 5.5% in the past three months against the industry’s decline of 1.3%.

From a valuation standpoint, PEP trades at a forward price-to-earnings ratio of 18.17X, slightly above the industry’s average of 18.14X.

The Zacks Consensus Estimate for PEP’s 2025 earnings implies a year-over-year decline of 0.7%, whereas its 2026 earnings estimate indicates year-over-year growth of 5.6%. The company’s EPS estimates for 2025 and 2026 have moved northward in the past 30 days.

PEP stock 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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