Group 1 - Coca-Cola has had a strong performance in 2025, up 15%, outperforming the S&P 500 which is up 3% [1] - The company is the largest beverage company globally, with $48 billion in trailing-12-month sales and about 200 brands, 30 of which generate over $1 billion in sales each [2] - Coca-Cola demonstrates resilience even in tough economic conditions, often outperforming when investors seek safe stocks [3] Group 2 - The company benefits from low exposure to tariffs due to its localized production approach, with most U.S. products made domestically [5] - In Q1, Coca-Cola reported a 2% year-over-year increase in unit case volume and gained market share across all beverage categories [6] - Organic revenue increased by 6%, adjusted operating income rose by 10%, and comparable operating margin improved to 33.8% from 32.4% [7] Group 3 - Coca-Cola has transformed under CEO James Quincey since 2018, restructuring its brand portfolio and emerging stronger post-pandemic [10] - The company is now positioned for growth with a 10-year high in EPS and various strategies to enhance affordability and marketing [12] - The overall beverage industry is expected to grow in the mid-single digits, providing Coca-Cola with organic growth opportunities [13] Group 4 - Coca-Cola has significant room for growth in emerging markets, holding only 7% market share despite 80% of the world's population being in these regions [14] - The company continues to acquire new global brands that integrate well into its distribution system, contributing to high-margin revenue [15]

Industry Overview - The Zacks Beverages – Soft Drinks industry is characterized by strong growth potential driven by rising consumer demand for healthier, functional, and eco-friendly beverages [1] - Companies are innovating and diversifying their portfolios to capture new market opportunities [1] - The industry is experiencing a digital transformation with brands adopting direct-to-consumer channels and subscription models to enhance customer relationships [1] Current Challenges - The industry faces persistent headwinds such as elevated input costs, supply-chain disruptions, and tariff-related uncertainties that pressure margins [2] - Rising packaging and freight expenses, along with volatile commodity prices, challenge profitability [2] - Newly imposed U.S. tariffs on imports from Canada and Mexico create additional financial pressure and uncertainty [6] Consumer Trends - There is a significant shift in consumer preferences towards healthier beverage options, including drinks made with natural ingredients and reduced sugar [4] - Plant-based beverages and functional drinks that promote hydration and energy are gaining popularity among health-conscious consumers [4] - Companies are expanding into adjacent categories, such as ready-to-drink alcoholic beverages, to capitalize on these trends [4] Digital Growth & Innovation - The industry is leveraging digital transformation to enhance consumer engagement and boost growth [5] - Brands are investing in direct-to-consumer platforms and subscription-based models to secure recurring revenue [5] - Product innovation remains a key growth driver, with companies refining their portfolios and launching new products [5] Financial Performance - The Zacks Beverages – Soft Drinks industry currently holds a Zacks Industry Rank of 63, placing it in the top 26% of over 250 Zacks industries, indicating bright near-term prospects [8] - The industry has underperformed the Consumer Staples sector and the S&P 500 Index over the past year, with a collective growth of 0.4% compared to the sector's 3.5% and the S&P 500's 11.9% [10] Valuation Metrics - The industry is currently trading at a forward 12-month price-to-earnings (P/E) ratio of 18.68X, compared to the S&P 500's 21.97X and the sector's 17.75X [13] - Over the past five years, the industry's P/E ratio has ranged from a high of 23.8X to a low of 17.22X, with a median of 21.45X [13] Notable Companies - **Coca-Cola (KO)**: Positioned for long-term growth through strategic transformation and digital investments, with a projected sales growth of 2.4% and earnings growth of 2.8% for 2025 [17][18] - **Zevia (ZVIA)**: Focused on zero-sugar, naturally sweetened drinks, with a projected sales growth of 3.4% and earnings growth of 38.7% for 2025 [21][22] - **Monster Beverage (MNST)**: Continues to perform well in the energy drinks category, with projected sales growth of 5.9% and earnings growth of 14.8% for 2025 [24][25] - **Keurig Dr Pepper (KDP)**: Expected to benefit from growth in the Refreshment Beverages segment, with projected sales growth of 5.6% and earnings growth of 6.3% for 2025 [28][29] - **Primo Brands (PRMB)**: Specializes in healthy hydration with a projected sales growth of 145.6% and earnings growth of 52.5% for 2025 [33]