Is Coca-Cola's Zero Sugar Momentum Reshaping Its Core Portfolio?

The Coca-Cola Company’s KO Zero Sugar line has rapidly evolved from a niche offering into one of the central growth engines of its global portfolio. In recent quarters, the brand’s performance has been nothing short of transformative, driving renewed consumer engagement and reshaping the company’s sparkling beverage strategy. In third-quarter 2025 earnings call, management emphasized that Coca-Cola Zero Sugar continues to post strong growth across markets such as Brazil, Mexico and North America, helping the company gain value share even amid macroeconomic pressures. This success underscores Coca-Cola’s ability to capture shifting consumer preferences toward healthier, low-calorie alternatives without sacrificing the brand’s core identity of refreshment and enjoyment.

Zero Sugar’s momentum is reshaping Coca-Cola’s innovation and marketing strategy. The company is launching new flavors, leveraging digital engagement and connecting with younger consumers seeking a balance between taste and health. Its success has also revitalized Diet Coke, attracting new drinkers through nostalgic flavors and creative campaigns. Together, Coke Zero Sugar and Diet Coke strengthen Coca-Cola’s “light and zero” portfolio, expanding the sparkling category rather than competing within it.

Coca-Cola’s Zero Sugar success is redefining the company’s core business. Once an alternative to traditional cola, it has become a major driver of category growth, improved revenue mix and portfolio premiumization. Its strong momentum highlights Coca-Cola’s ability to blend innovation, marketing precision and consumer insight to turn health trends into lasting growth. As Zero Sugar’s share of sparkling volumes rises, it’s clear the brand is now central to Coca-Cola’s future vision.

How PEP & KDP Are Brewing Growth Through Innovation

In a fiercely competitive beverage market, PepsiCo Inc. PEP and Keurig Dr Pepper Inc. KDP are redefining their growth paths through innovation and consumer-focused strategies.

PepsiCo is strategically balancing growth and margin recovery as it navigates a complex cost environment. The company’s productivity and pricing initiatives continue to bolster performance across its global beverage and snack divisions. In recent quarters, PepsiCo has leveraged its strong brand portfolio — including Pepsi Zero Sugar, Gatorade and Lay’s — to sustain organic revenue growth while reinvesting in digitalization and supply chain efficiency. Despite lingering inflationary pressures, PepsiCo’s disciplined cost management and innovation-driven marketing are supporting gross margin improvement and positioning it for steady profitability in 2026.

Keurig Dr Pepper is reinforcing its market position through innovation, disciplined execution and diversification across coffee and soft drinks. The company’s strong performance in its coffee segment, driven by expanded K-Cup partnerships and at-home consumption, complements solid gains in its beverage portfolio, including Dr Pepper, Snapple and Canada Dry. KDP continues to benefit from its agile operating model, which enables pricing precision and strategic reinvestment in brand building. With a focus on affordability and premium innovation, the company is capturing growth across multiple consumer segments.

The Zacks Rundown for Coca-Cola

KO’s shares have risen 9.2% year to date compared with the industry’s growth of 4.4%.

From a valuation standpoint, Coca-Cola trades at a forward price-to-earnings ratio of 21.35X, significantly higher than the industry’s 17.77X.

The Zacks Consensus Estimate for KO’s 2025 and 2026 earnings implies year-over-year growth of 3.5% and 8%, respectively. Earnings estimates for 2025 and 2026 have been unchanged in the past seven 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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