PepsiCo Grapples with Shifting Beverage Preferences as Soda Sales Soften
PepsiCo is facing mounting pressure as consumer preferences pivot away from traditional carbonated soft drinks, raising questions about the long-term viability of its once-dominant soda portfolio. The beverage giant, known for flagship products like Pepsi and Mountain Dew, is seeing declining volumes, particularly in North America—its largest market.
According to recent performance data, PepsiCo’s North American beverage business posted flat or slightly negative volume growth despite revenue gains driven by price hikes. This pattern reflects a broader consumer shift toward healthier, lower-sugar beverages, a trend that continues to reshape the competitive landscape across the FMCG sector.
Notably, Pepsi’s carbonated soft drink volumes were down mid-single digits in 2023. Even legacy brands such as Diet Pepsi and Mountain Dew Zero Sugar have struggled to gain meaningful traction. PepsiCo’s reliance on its core soda brands is under scrutiny as these products increasingly fall out of step with wellness-oriented consumer habits.
Meanwhile, rival Coca-Cola has been more agile in diversifying its beverage portfolio, gaining share in categories like bottled water, energy drinks, and ready-to-drink teas. While PepsiCo has invested in similar segments, including its recent push into functional beverages and premium hydration with brands like LIFEWTR and Gatorade Zero, these efforts have yet to offset the slowdown in its traditional soda lines.
International markets offer some relief, with emerging markets in Asia and Africa still posting volume growth for carbonated beverages. However, profitability in these regions remains lower than in the U.S., complicating efforts to rebalance revenue streams.
PepsiCo’s brand equity still holds strong, but analysts warn that the company needs to accelerate innovation in better-for-you segments while re-evaluating the role of soda within its broader strategy. With younger consumers increasingly drawn to plant-based, low-sugar and functional drink options, PepsiCo faces a critical inflection point that could redefine its beverage roadmap.
The company’s future success may hinge on its ability to reduce its dependence on carbonated soft drinks and capture sustained growth in trending categories, from immune-boosting drinks to sustainable packaging-led offerings. For FMCG players navigating similar transitions, PepsiCo’s challenges serve as a case study in adapting legacy portfolios for the evolving beverage economy.