While inflation may have cooled in much of the food and beverage sector, the soft drink category remains a study in contrast. Price increases have held through 2024, and volume continues to grow, but under the surface, the category is unusually volatile, especially for emerging brands.

Evidnt’s retail tracking across mid- and long-tail channels shows that elasticity in soft drinks is among the highest of all major categories, and recent shifts in consumer behavior suggest that brand loyalty is being redefined in real time.

Pricing Is Holding — But Sensitivity Is Creeping In

Over the past 12 months, soft drink brands have successfully passed through modest price increases:

• Q2 2024: +0.3%

• Q3 2024: +1.2%

• Q4 2024: +0.71%

Despite these hikes, sales continued to grow — between +2.7% and +8.2%, depending on brand and channel. This reflects a category that still has room for pricing adjustments, but only under the right conditions.

What’s unusual, though, is the variability. Elasticity of demand across the category has been average, but with extreme outliers — in some cases, SKUs experienced elasticity well into the thousands. These outliers often reflect newer or regional brands whose performance is deeply impacted by price shifts, competitive promotions, or OOS (out-of-stock) dynamics.

Challenger Brands Face Margin Pressure

Brands like Olipop and Poppi have helped redefine the functional soda space, but recent data shows a clear divergence:

• Olipop continues to perform relatively well, likely due to better inventory coverage and brand stickiness.

• Poppi, a larger brand in terms of sales, has shown signs of slower growth, as pricing competition and distribution inconsistency appear to chip away at share. We are closely monitoring how the situation will change following PepsiCo’s acquisition of Poppi.

These brands are facing the limits of premium pricing in a market where legacy players like Coke and Pepsi remain present, affordable, and familiar. As pricing tightens and economic pressures mount, consumers are reassessing what they’re willing to pay for, and challenger brands need to work harder to maintain their momentum.

Out-of-Stocks Are Quietly Rising

Out-of-stock (OOS) rates in soft drinks are showing a national upward trend, not tied to specific regions or retailers. This may reflect brand-level production constraints, shifting supplier dynamics, or the difficulty newer brands face in scaling their inventory to meet wider demand.

For legacy brands, this trend represents an opportunity to reclaim shelf space. For emerging players, it’s a warning sign: even modest OOS can lead to share loss in a category where consumers are willing to substitute quickly.

What Brands Should Prioritize

To remain competitive in a high-elasticity, high-volatility category like soft drinks, brands must get more tactical across four key areas:

1. Manage Price Increases Strategically

Pricing tolerance exists, but it’s not universal. Brands should use SKU-level elasticity tracking to identify where price changes are absorbed — and where they cause attrition.

2. Strengthen Core Product Execution

Your flagship SKUs must drive volume, retention, and value perception. Consumers are less patient with variety packs or niche flavors when they’re watching their budgets.

3. Monitor Emerging Brand Vulnerability

Challenger brands have hit a ceiling in some channels. Scale, availability, and operational consistency now matter as much as branding or mission-driven messaging.

4. Actively Track OOS and Shelf Presence

Brands that win at the shelf — through consistent inventory, promo timing, and visibility — will outperform flashier competitors that can’t meet demand reliably.

Conclusion

Soft drinks remain a high-reward category — but one that’s becoming harder to navigate.

Prices are holding, sales are still climbing, and consumer demand remains steady — but only for the brands that understand how quickly sentiment and loyalty can shift in this space.

Legacy brands are reclaiming ground. Premium players must deliver more than positioning. And real-time visibility into price sensitivity and OOS risk is now mission-critical.

If your team is managing soft drink pricing, promotions, or channel strategy, Evidnt provides the clarity you need to make faster, more confident decisions in a volatile category.