-Trump administration imposed new tariffs affecting beverage ingredients and packaging materials.
-Pepsi faces an estimated 10% increase in product costs due to reliance on Irish concentrate imports.
-Coca-Cola’s higher domestic production share mitigates tariff impact.
-Tariffs on aluminum expected to raise canned beverage prices.
-Pepsi has been continuing to lose U.S. market share, recently falling behind Dr Pepper.
Opinion
-Pepsi's supply chain, reliant on Irish imports, increases vulnerability to tariff risks.
-Pepsi's existing market share weakness is likely to worsen due to cost-driven price disadvantages.
-Coca-Cola’s domestic production shield provides relative pricing power against tariff pressures.
-Tariff-driven cost pressures could make Pepsi’s market recovery even more challenging.
Core Sell Point
Pepsi is likely to lose further ground in the U.S. market due to additional competitive disadvantages stemming from tariff-driven cost pressures.
The Trump administration’s newly imposed tariffs are reshaping the competitive dynamics between Coca-Cola and PepsiCo. Due to its reliance on importing key concentrate ingredients from Ireland, Pepsi is now facing an approximately 10% increase in product costs. In contrast, Coca-Cola, which sources a larger portion of its concentrate domestically within the U.S., has been able to absorb much of the tariff impact, thereby maintaining a relative pricing advantage.
The tariffs are also affecting beverage packaging. With tariffs imposed on aluminum, the cost of canned beverages is expected to rise. Coca-Cola is exploring options such as shifting more production to plastic bottles to mitigate the impact. In a price-sensitive consumer market, these developments are likely to add more pressure on Pepsi’s competitiveness.
Pepsi had already been losing U.S. market share for decades, and recently lost its second-place position to Dr Pepper. Although Pepsi maintains manufacturing facilities in Texas, Uruguay, and Singapore, its heavy dependence on Irish-sourced concentrate leaves it vulnerable to ongoing tariff risks. Independent bottlers are also raising concerns about rising production costs, further dimming Pepsi’s chances of reclaiming market share.
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