Coca-Cola, PepsiCo feel pressure as shoppers cut back on spending

Dubai: Coca-Cola and PepsiCo are feeling growing pressure as shoppers, strained by years of higher prices, rethink how much they spend on food, drinks, and meals outside the home.

Grocery bills remain elevated, leaving many households with less room for extras. Shoppers are buying fewer nonessential items, switching to cheaper store brands, and cutting back on restaurant visits. That shift is starting to show up in soda and snack sales, even as both companies rely on higher prices to keep revenue growing.

The gap between rising prices and slower sales volumes is becoming harder to ignore, raising questions about how long the world’s biggest beverage makers can offset weaker demand by charging more.

PepsiCo has reported drops of as much as 4% in North American beverage sales volumes in some quarters during 2025 and early 2026, pointing to softer demand in one of its most important markets.

Coca-Cola is seeing similar challenges. The company recently posted weaker-than-expected quarterly revenue, its first miss since 2020. For the quarter ended Dec. 31, net sales rose 2% to $11.82 billion, while organic revenue increased 5%, helped mainly by pricing.

The amount of product sold rose just 1% in the quarter. For all of 2025, Coke said total sales volume was unchanged from the year before. Its sparkling soft drinks business was flat, and “Trademark Coca-Cola,” the flagship soda, showed no growth worldwide.

The slowdown is sharper in categories that shoppers are more willing to skip. Coca-Cola said sales volumes in its juice, value-added dairy, and plant-based drinks business fell 3% in the quarter, with similar declines late last year.

As demand weakens, Coke is trimming its lineup. The company said it will stop selling Minute Maid frozen canned juice in the U.S. after 80 years, pointing to falling sales.

The changes highlight how shoppers are narrowing their choices, focusing on staples while cutting back on drinks they see as less essential.

Rising prices are no longer being accepted quietly. Research shows that 82% of shoppers changed how they bought groceries in 2025, often by choosing cheaper brands or skipping nonessential items altogether.

PepsiCo has responded by planning price cuts of up to 15% on brands such as Lay’s and Doritos in 2026. The company said the move followed “extensive consumer feedback around affordability limitations,” a sign that shoppers are hitting their limits.

Coca-Cola is taking a different route by selling smaller packages. The company recently rolled out 7.5-ounce mini cans in North American convenience stores, priced around $1.29, to keep drinks within reach for shoppers watching their spending.

During the fourth quarter, Coca-Cola raised prices by 4% in North America and 1% worldwide, while cutting prices in some parts of Europe and Asia to help lift demand.

Chief Executive James Quincey said companies must adapt to both tighter budgets and new rules. “Clearly, we think that, consumers should be allowed to choose, but regulation is regulation,” Quincey said on a call with investors. “That just puts the challenge on us to give them the category, the beverage, the brand, the pack size, the price point that works for them.”

Those pressures are growing as governments look for ways to limit sugary drink consumption, especially in key markets.

A large share of soda sales comes from restaurants, theaters, and other places outside the home, where drinks usually bring in higher profits.

Early 2025 was one of the weakest periods for restaurant chains in years. Big partners such as McDonald’s, Wendy’s, and Burger King reported falling same-store sales, showing that fewer people were eating out.

When shoppers skip the drive-thru or a sit-down meal, they also skip the fountain drink that often comes with it, making eating out one of the first expensesoles cut when money feels tight.

Not all parts of the business are struggling. Coca-Cola Zero Sugar posted a 13% jump in worldwide sales volume in the fourth quarter.

Coke’s water, sports drink, coffee, and tea business also grew volumes by 3%, led by brands such as Smartwater and Bodyarmor. These results suggest that many shoppers are still willing to spend on drinks they see as healthier or worth the extra cost.

Sales volumes rose 1% in North America and 2% in Latin America during the quarter, while global volumes increased 1%, supported by stronger demand in markets such as the U.S., Japan, and Brazil.

New laws could further weigh on sales. Mexico introduced a tax on sugary drinks at the start of the year, hitting one of Coke’s largest markets.

In the U.S., states including Indiana, Iowa, Nebraska, Utah, and West Virginia now restrict the use of SNAP benefits to buy soda, with more states considering similar steps. Coca-Cola said it expects the impact to be manageable.

“Consumers should be allowed to choose,” Quincey said, adding that people may still spend cash on items that benefits no longer cover.

Coca-Cola expects organic revenue to grow 4% to 5% in 2026, with earnings rising 7% to 8%. Quincey said the company is taking a careful approach, especially in overseas markets where conditions remain uneven.

Shares in Coca-Cola are up about 20% over the past year, lifting its market value above $330 billion, though the stock fell 2% after the earnings report as investors focused on the slower outlook.

Leadership is also changing. Chief Operating Officer Henrique Braun will become chief executive on March 31, with Quincey moving into the role of executive chairman. Braun said his focus will be on faster product launches, better in-store execution, and stronger digital tools.

“Our system needs to focus on being a little bit better and sharper everywhere to drive transformation and impact,” Braun said, as the company prepares to outline its plans at the February 17 CAGNY conference.

For Coca-Cola and PepsiCo, the message from shoppers is becoming clearer. Familiar brands still matter, but only when the price, size, and timing fit tighter household budgets.