5 Soft Drink Stocks to Hold Their Ground As Cost Pressures Mount

Core Insights - The Zacks Beverages – Soft Drinks industry is under pressure from rising input costs and tariff uncertainties, which are straining margins and complicating production planning [1][4] - Despite these challenges, there are significant opportunities arising from shifting consumer preferences towards healthier and functional beverages, as well as advancements in digital growth and innovation [2][6] Industry Overview - The industry includes companies that manufacture and sell non-alcoholic beverages, such as soft drinks, juices, and ready-to-drink beverages, often through a network of wholesalers and retailers [3] - Companies are facing challenges from rising costs of key inputs like sugar and packaging materials, alongside tariff volatility, which complicates pricing and supply-chain strategies [4][5] Consumer Trends - There is a notable shift in consumer preferences towards healthier, natural, and functional beverages, leading to increased demand for plant-based and botanical drinks [5] - Companies that innovate and adapt to these trends are better positioned to capture market share and drive growth [2][5] Digital Transformation - The industry is experiencing rapid digital growth, with brands leveraging technology for consumer engagement and operational efficiency [6] - Advanced data analytics and AI are being utilized to understand consumer preferences and optimize marketing strategies [6] Market Performance - The Zacks Beverages – Soft Drinks industry has outperformed the Consumer Staples sector but underperformed the S&P 500 Index over the past year, with a collective gain of 3.1% compared to the sector's decline of 5.7% [10] - The industry's current forward 12-month price-to-earnings (P/E) ratio stands at 18.07X, lower than the S&P 500's 22.8X and the sector's 16.44X [13] Company Highlights - Monster Beverage Corporation (MNST): The company is experiencing growth in its energy drinks category and has seen a 33.3% increase in shares over the past year, with positive sales and earnings estimates for 2025 [17][18] - Vita Coco (COCO): This company has benefited from strong growth in the coconut water category, with shares rising 42.4% in the past year and positive sales and earnings projections for 2025 [21][22] - Coca-Cola Company (KO): The company is focusing on digital transformation and has seen a 12.4% increase in shares over the past year, with modest growth expectations for 2025 [24][25] - PepsiCo Inc. (PEP): Despite a 10.3% decline in shares over the past year, the company is expected to benefit from its diverse product offerings and cost-management initiatives [28][29] - Keurig Dr Pepper Inc. (KDP): The company is focusing on consumer-centric innovation and has seen a 16.2% decline in shares over the past year, with growth expectations for 2025 [32][33]