Coca-Cola's Brand Mix Shifts: Is the Zero-Sugar Push Paying Off?

The Coca-Cola Company KO leaned further into its diversified brand portfolio in first-quarter 2025, spotlighting growth across low and no-calorie offerings like Coca-Cola Zero Sugar, which was a standout performer. Coca-Cola Zero Sugar delivered yet another strong quarter, helping power a broader shift across the company’s 30-brand portfolio toward low and no-calorie drinks.

The company noted that 30% of its total volume now comes from low or no-calorie beverages, and 68% of its portfolio delivers under 100 calories per 12-ounce serving — an outcome of deliberate brand evolution shaped by consumer demand for healthier choices and more functional benefits.

At the heart of this shift is a sharpened focus on wellness and functional innovation. Coca-Cola’s first prebiotic soda, Simply Pop, debuted in select U.S. markets, while Coca-Cola Orange Cream, a limited-time flavor launch, generated $50 million in retail sales in the quarter. Global tea brand Fuze also continued to gain value share, supported by the latest launches in Canada and Spain.

Marketing muscle is matching the product push — the digital-first return of “Share a Coke” now targets Gen Z with personalized, tech-integrated engagement. Backed by Studio X and connected packaging, Coca-Cola is tailoring its outreach market-by-market, making global brands feel unmistakably local through campaigns like “Hecho en México” and “Everyday Tasty Celebrations.”

As KO navigates macro headwinds, including consumer sentiment dips and geopolitical tensions, its portfolio strategy is proving resilient. With a portfolio built around affordability and premiumization, and a disciplined focus on fewer but bolder innovations, the company is capturing health-conscious consumers without sacrificing scale. Zero sugar is not just a product; it is a pillar of growth and is reshaping what Coca-Cola means to the modern drinker. If momentum holds, this health-centric evolution may be one of KO’s most profitable pivots yet.

KO’s Primary Competitors in the Zero-Sugar Beverage Market

PepsiCo Inc. PEP and Keurig Dr Pepper Inc. KDP are the key competitors of Coca-Cola in the Zero-Sugar category.

PepsiCo is actively reshaping its brand portfolio to meet evolving consumer demands, with a sharp focus on zero-sugar and health-forward innovation. Pepsi Zero Sugar is performing strongly, supported by a wider shelf presence and targeted marketing to calorie-conscious younger consumers. PepsiCo is also accelerating its push into functional and wellness categories through brands like Gatorade Fit, Lifewtr, and Propel, driving its "Positive Choices" strategy focused on reduced sugar, hydration and added functionality. PEP’s portfolio increasingly overlaps with Coca-Cola’s, not just in core sodas but across energy drinks, hydration beverages and emerging wellness segments. As both giants scale zero-sugar and wellness-driven portfolios, their competition is increasingly shifting from traditional cola battles to a more dynamic race for leadership in the next generation of functional, health-centric refreshments.

Keurig Dr Pepper is shifting its brand mix to meet the growing demand for zero-sugar and health-focused drinks, with strong growth in Dr Pepper Zero Sugar and Diet Dr Pepper. It is expanding in better-for-you categories like flavored waters, low-calorie teas and functional beverages, pushing brands like Bai and Polar seltzers through its broad distribution. KDP plans to focus on premiumization, zero-calorie innovation and cross-channel execution to strengthen its health-forward position. While smaller globally than Coca-Cola, Keurig Dr Pepper overlaps domestically in carbonated drinks, water and wellness categories. Both are ramping up zero-sugar and wellness offerings, with KDP positioning itself as an agile, innovation-driven challenger.

The Zacks Rundown for Coca-Cola

KO shares have rallied 14.7% year to date compared with the industry’s growth of 7.8%.

From a valuation standpoint, HD trades at a forward price-to-earnings ratio of 24X, significantly higher than the industry’s 21.24X.

The Zacks Consensus Estimate for KO’s 2025 and 2026 earnings implies year-over-year growth of 2.8% and 8.2%, respectively. Earnings estimates for 2025 have been unchanged in the past 30 days, whereas that for 2026 has been northbound in the same period.

Coca-Cola 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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