Zero-Sugar Drinks Hit the Sweet Spot

What happened

Sales of PepsiCo's zero-sugar and low-sugar drinks doubled to a record 88% of volumes in the July-September 2026 quarter, up from 44% a year earlier. Coca-Cola's diet and light drink sales also doubled. Varun Beverages said higher sugar prices were offset by more low-sugar and no-sugar products.

Confirmed

Global impact / market context

Sugar is a major cost for soft drink makers, so selling more drinks with little or no sugar reduces how much sugar companies must buy. That protects profit per sale when sugar prices rise, and it shifts revenue toward products that may face fewer health-related concerns from consumers and regulators.

Analyst inference

The article frames this shift as companies speeding up production of diet and light drinks to avoid shortages. For investors, the key signal is that product mix, meaning the share of sales from each drink type, is helping offset rising raw material costs at PepsiCo, Coca-Cola and bottler Varun Beverages.

Analyst inference

What to watch

1. Watch whether Coca-Cola completes its planned aggressive roll-out of Coke Zero Zero, a zero-sugar drink, and whether PepsiCo and its bottler Varun Beverages keep expanding low-sugar and no-sugar production capacity. Confirmed
2. Watch whether companies raise production of diet and light drinks fast enough to avoid shortages, as the headline suggests they are speeding up output to meet demand. Proposed
3. Watch sugar prices and gross margins, which mean profit left after direct product costs, at PepsiCo, Coca-Cola and Varun Beverages to see if the low-sugar mix keeps offsetting higher sugar costs. Analyst inference

Evidence

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