Soft Drink Stocks Face Margin Squeeze, But These 5 Are Still Worth Watching

The beverage industry is getting squeezed hard. Rising sugar prices, aluminum can costs, packaging materials, and unpredictable tariffs are eating into margins while making production planning a headache. Companies have to walk a tightrope between raising prices and losing customers—especially tricky in price-sensitive markets.

But here’s the flip side: consumer demand is shifting dramatically toward healthier, functional drinks. Plant-based beverages, botanical blends, and wellness-focused formulations are booming. Meanwhile, AI-driven e-commerce and smart supply chains are helping brands cut costs and reach customers more directly.

The Industry Temperature Check

The Zacks Beverages - Soft Drinks industry is currently ranked #147 out of 250+ industries—basically in the bottom 39%. That’s because analysts are gradually downgrading earnings expectations for the sector. The industry gained 3.1% over the past year, underperforming the S&P 500’s 12.3% rally but beating the broader Consumer Staples sector (down 5.7%).

Valuation-wise, the industry trades at 18.07X forward P/E—cheaper than the S&P 500 (22.8X) but pricier than the sector average (16.44X). Over five years, multiples have ranged from 17.2X to 23.76X.

Five Stocks With Momentum

Monster Beverage (MNST) — Zacks Rank #1
Energy drinks are the growth engine here. Monster Energy’s portfolio keeps expanding with new flavors and formats, and the company is raising prices to absorb cost pressures. Shares are up 33.3% in the past year. Consensus expects 2025 sales to jump 9.6% and earnings to grow 22.2%—and analyst estimates have moved up 3.7% in the past month.

Vita Coco (COCO) — Zacks Rank #1
Coconut water went from niche to mainstream, and Vita Coco is leading that charge. The company managed 15% CAGR over four years by expanding drinking occasions and improving brand execution. Stock is up 42.4% over the past year. Analysts expect 2025 sales growth of 18.3% and earnings up 15%, with upside revisions continuing (up 5.1% in the past 30 days).

The Coca-Cola Co. (KO) — Zacks Rank #3
The beverage giant is betting big on e-commerce and diversification into faster-growing RTD (ready-to-drink) categories. Digital channels are doubling in many markets. The company is benefiting from better pricing power and solid share gains both online and in-store. 2025 estimates suggest modest growth: sales up 2.7%, earnings up 3.5%. Stock gained 12.4% last year.

PepsiCo (PEP) — Zacks Rank #3
Strength in global beverages and snacks is supporting the business. The company expects market share gains in carbonated soft drinks, RTD tea, and water categories through investments in supply chain and digital capabilities. However, shares are down 10.3% over the past year, and 2025 earnings are expected to decline slightly (down 0.7%). Analyst consensus has remained flat recently.

Keurig Dr Pepper (KDP) — Zacks Rank #3
This coffee and beverage player is seeing solid momentum in its Refreshment Beverages segment with good market share gains. Portfolio expansion and cost efficiency initiatives are supporting profitability. 2025 consensus calls for sales growth of 7.4% and earnings up 6.8%. Shares have dropped 16.2% over the past year despite the improving fundamentals.

Bottom Line

The soft drink space is evolving fast. Cost pressures are real, but companies that innovate, leverage digital channels, and tap into the health-and-wellness megatrend can still deliver returns. Monster and Vita Coco show the strongest momentum, while the mega-caps offer stability at reasonable valuations.