Beverage and snack company PepsiCo (PEP) has changed how it markets its sodas by putting Pepsi Zero Sugar front and center. In fact, the company brought back the Pepsi Challenge last year for the first time in 50 years, but instead of using regular Pepsi or Diet Pepsi, it compared Pepsi Zero Sugar against Coca-Cola Zero Sugar. And, as Bloomberg reports, that same focus will continue at the upcoming Super Bowl, where Pepsi’s expensive TV ad will feature Zero Sugar rather than the original soda. According to Pepsi, the company has gone “all in” on Zero Sugar, with most of its marketing budget now spent promoting it.
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Interestingly, this shift is part of a larger trend across the soda industry. While Diet and Zero Sugar drinks are both calorie-free and use artificial sweeteners, Zero Sugar branding connects better with younger consumers. This is because many Gen Z and wellness-minded shoppers avoid sugar but also dislike diet culture and calorie counting, which makes the word “diet” feel outdated and “radioactive,” according to Malachite Strategy and Research CEO Kevin Ryan. As a result, Zero Sugar drinks drove 52% of U.S. soda sales growth last year, even as sales of full-sugar sodas and diet options fell.
In addition, both Pepsi and Coca-Cola (KO) sold more Zero Sugar products in 2025, despite an overall decline in soda consumption. Other soda makers, including Keurig Dr Pepper (KDP), are making similar moves by replacing diet sodas with Zero Sugar versions and adding more flavors. Therefore, with younger consumers frequently trying new drinks, soda companies see Zero Sugar as a key way to stay relevant and drive growth.
Is PEP Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on PEP stock based on seven Buys, eight Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average PEP price target of $161.85 per share implies 12.4% upside potential.
