Zero-Sugar Drinks Taste Sweet Success

What happened

PepsiCo's zero-sugar and low-sugar drinks doubled to a record 88% of total volumes in the July-September '26 quarter, up from 44% a year earlier. Coca-Cola's diet and light drinks sales also doubled, now including Schweppes sugar-free flavoured drinks.

Confirmed

Global impact / market context

Higher zero-sugar sales mean less sugar bought, which offsets rising sugar costs and helps protect profit per sale. For bottlers like Varun Beverages, a richer low-sugar mix supports gross margins, which is sales minus the direct cost of goods.

Analyst inference

PepsiCo and Coca-Cola are shifting their drink ranges toward no-sugar versions as consumers avoid sugary drinks. This lowers exposure to sugar price swings and West Asia supply pressures, and moves revenue toward products with steadier input costs and potentially better profit per sale.

Analyst inference

What to watch

1. Coca-Cola is preparing an aggressive roll out of Coke Zero Zero, its global zero-sugar zero-caffeine drink, alongside pushing sugar-free Thums Up, Coke Zero, Diet Coke and Sprite Zero. Confirmed
2. Watch whether PepsiCo and Coca-Cola keep expanding zero-sugar options, since continued growth in this mix would further reduce sugar purchases and protect gross margins if sugar prices stay high. Proposed
3. Track whether sugar-free sales keep taking share of total volumes; if they do, bottlers like Varun Beverages should keep offsetting higher sugar costs and support profit per sale. Analyst inference

Evidence

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