Zero-sugar drinks hit the sweet spot as sales double for PepsiCo and Coca-Cola in Sept qtr

New Delhi: Sales of PepsiCo's zero-sugar and low-sugar drinks doubled to a record 88% of volumes in July-September 2026 quarter, up from 44% in the corresponding year-ago quarter as consumers turned away from sugary drinks. This helped helped mitigate margin pressures amid steep and continuous surge in sugar prices.

Larger rival Coca-Cola, which leads the ₹60,000-crore soft drinks category, also saw sales of its diets and lights drinks double over last year, which now include Schweppes sugar-free flavoured drinks as well.

PepsiCo's bottling partner Varun Beverages (VBL) told investors at its post September quarter earnings call in a management commentary that surge in prices of sugar was offset by increase in low sugar and no sugar products.


"In India, savings in sugar consumption, driven by a higher mix of low-sugar, no-sugar products helped maintain gross margins despite the inflationary raw material environment affected by the West Asia crisis," Raj Gandhi, president and wholetime director at VBL said on the investor call. The numbers include sales of sugar-free Pepsi and 7 Up sugar-free, Evervess soda and Aquafina water.

Coca-Cola is aggressively pushing sugar-free Thums Up, Coke Zero, Diet Coke and Sprite Zero, and preparing an aggressive roll-out of Coke Zero Zero, its global zero-sugar zero-caffeine drink. From a five-year-high record of 30% of its total volume sales being contributed by diet and light drinks last year, the number has more than doubled to touch over 60%, two senior bottling associates of the beverage maker said.

"Diet Coke alone has grown 150% in the first nine months of 2026 compared to the same period last year," one of the executives said. This is despite an acute shortage of aluminium cans in April-May this year, as a result of supply disruptions amid the West Asia war.

An email sent to Coca-Cola seeking comments remained unanswered till press time on Monday.

Without mentioning specific data about sales of sugar-free beverages, Coca-Cola said in its July-September earnings call last week that "affordability, zero-sugar offerings and local-market execution" supported performance across an uneven global consumer environment.

As consumer demand for zero-sugar and low-sugar drinks outperformed their sugary variants by a higher-than-expected margin in the July-September 2026 quarter, companies are accelerating manufacturing of diets and lights ahead of targets, to avoid shortage.

With the low and no-sugar category growing twice faster than sugary drinks, the incumbents are also competing with multiple new entrants in the category.

Challenger brand Lahori Zeera recently introduced its first sugar free variant, as has Reliance Consumer Products' Campa and Zyro from Veeba Foods which has also launched zero-sugar colas.

And two months ago, clean-label beverage brand Sorry Sugar announced a fund raise of $1 million in its first seed funding round.

The rapid switch in consumer preferences comes at a time when prices of sugar in India have hit record highs this year, as a result of a combination of factors such as lower-than-expected domestic production, increase in demand amid the festive season, weather-related damage to the sugarcane crop, and tightening global sugar supplies.

Compared to last year when sugar prices were in the range of ₹40-50 per kg, this year the prices surged sharply to anywhere between ₹58-65 a kg.