Coca-Cola Eyes Margin Gains as Supply-Chain Costs Begin to Ease

The Coca-Cola Company KO is entering a more favorable margin environment as easing supply-chain pressures begin to replace the cost inflation that has weighed on consumer staples in the past few years. After navigating elevated input costs, logistics disruptions and currency headwinds, the company is now seeing early signs of normalization across key commodities and freight markets. This shift is giving Coca-Cola greater flexibility to rebalance its profit model, moving from defensive pricing actions toward a more sustainable mix of productivity, disciplined investment and revenue-led growth.

A key driver of margin improvement is Coca-Cola’s renewed focus on operational efficiency and cost discipline. Management has emphasized productivity initiatives across manufacturing, procurement and marketing, supported by digitalization and data-driven decision-making. As transportation and packaging costs stabilize, these efficiency gains are flowing more clearly to the bottom line. At the same time, Coca-Cola continues to fine-tune its revenue growth management, using targeted pricing, smarter package architecture and channel mix optimization to protect margins without dampening consumer demand.

Importantly, margin recovery is not coming at the expense of brand investment. Coca-Cola is reinvesting savings into marketing, innovation and execution, alongside its bottling partners, to sustain volume growth and long-term competitiveness. With inflation moderating and supply-chain costs easing, the company is well-positioned to expand margins while maintaining a balance between affordability and premiumization. This disciplined approach suggests Coca-Cola’s margin gains are not just cyclical relief, but part of a more resilient and structurally improved operating model.

How are PEP & KDP Positioned for Margin Expansion?

In a fiercely competitive beverage market, PepsiCo Inc. PEP and Keurig Dr Pepper Inc. KDP are leveraging easing cost pressures, operational efficiencies and disciplined pricing strategies to drive sustainable margin expansion while continuing to invest in brand strength and innovation.

PepsiCo is positioning itself for margin expansion as supply chain and input cost pressures begin to ease. With freight, packaging and commodity inflation moderating, PepsiCo is shifting from heavy reliance on pricing to a more balanced mix of productivity and revenue growth management. The company’s ongoing investments in automation, digital supply-chain tools and manufacturing efficiency are starting to deliver structural cost savings, while disciplined pricing and portfolio premiumization continue to support margins. 

Keurig Dr Pepper is also benefiting from a more normalized supply-chain environment, which is improving visibility on costs across its beverage and coffee operations. Lower transportation and packaging pressures, combined with KDP’s agile operating model, are creating opportunities to expand margins through productivity gains rather than aggressive pricing. The company’s focus on disciplined cost control, efficient manufacturing and targeted price-pack architecture is helping balance affordability with profitability.

The Zacks Rundown for Coca-Cola

KO’s shares have risen 5.9% in the three months compared with the industry’s growth of 7.8%.

From a valuation standpoint, Coca-Cola is trading at a forward price-to-earnings ratio of 21.73X, significantly higher than the industry’s 18.22X.

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 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.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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

Zacks Investment Research