Is PepsiCo's Innovation Pipeline Strong Enough to Reaccelerate Growth?

PepsiCo, Inc.’s PEP innovation strategy is a core growth engine. The company’s innovation pipeline is robust, increasingly well-aligned with the evolving consumer preferences, especially the shift toward health-oriented beverages and snacks, functional products and clean-label reformulations. PEP’s strong focus on innovation, particularly around permissible and functional product benefits, along with ongoing portfolio reshaping, optimized price-pack architecture and growth initiatives in Away From Home channels, appears encouraging.

With innovation a critical priority, the company is working with a heightened sense of urgency to build new platforms targeting rapidly growing segments that are otherwise low-growth categories. PEP is accelerating innovation across the protein space, including the relaunch of Muscle Milk, Starbucks and protein offerings to meet morning consumption needs, and protein-enhanced extensions of Doritos and Quaker.

The company is advancing a new product development from Propel for GLP-1 consumers, featuring specialized electrolytes, high-fiber content and meaningful levels of protein. More broadly, PEP is accelerating the rollout of higher-fiber products across its portfolio, aligning innovation with evolving health and weight-management trends.

The company is also innovating with new oils across select platforms, particularly within its potato-based products—introducing versions made with avocado oil and olive oil to enhance nutritional perception and support clean-label positioning. In addition, the company is launching a new platform, Naked, focused on products with no colors and artificials, reinforcing PepsiCo’s commitment to clean-label innovation.

At its core, PepsiCo is executing broader, consumer-centric innovations that align well with the shifting consumer preferences toward healthier offerings, positioning it to reignite growth over time. Strong innovation capabilities, paired with disciplined execution, streamlined operations, enhanced market responsiveness, productivity and continued digitization, will help reaccelerate growth in a highly-competitive consumer goods environment.

PEP’s Peers: How are KO & MNST Innovating?

The Coca-Cola Company KO and Monster Beverage Corp. MNST are making steady innovations to stay competitive.

Coca-Cola’s innovation strategy centers on strengthening core brands while expanding into high-growth categories, with zero-sugar reformulations, flavor extensions and packaging innovation, being key drivers. KO expands into higher-growth adjacencies like hydration, energy and ready-to-drink coffee through acquisitions and partnerships, supported by strong marketing and a streamlined brand portfolio that enhances execution and margins. Coca-Cola’s ongoing focus on innovation, digital transformation and marketing excellence further sharpens its competitive edge, with breakthrough product launches and culturally resonant campaigns elevating brand relevance.

Monster Beverage continues to invest heavily in new launches to strengthen its global footprint. MNST has rolled out several high-profile innovations, with a solid innovation pipeline planned for 2026. Building on the success of its $1 billion Ultra brand, Monster Beverage also introduced a new visual identity and merchandising strategy with dedicated Zero Sugar coolers, supported by a viral social media campaign around its flagship Zero Ultra drink. Hence, product innovation remains a core growth driver for Monster Beverage.

PEP’s Price Performance, Valuation and Estimates

Shares of PepsiCo have gained 17% in the past six months compared with the industry’s growth of 4.2%.

From a valuation standpoint, PEP trades at a forward price-to-earnings ratio of 17.74X compared with the industry’s average of 18.42X.

The Zacks Consensus Estimate for PEP’s 2025 earnings per share (EPS) implies a year-over-year drop of 0.6% while that of 2026 EPS shows 5.4% growth. The estimate for 2025 has been northbound, while that for 2026 has been southbound in the past seven days.

PepsiCo stock 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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