Investors have punished PepsiCo (PEP +2.42%) stock. Not only is it down roughly 10% so far in 2026, but it has also fallen 33% from its 2023 high as of this writing. The S&P 500 index has gained 13% so far this year, while PepsiCo competitor Coca-Cola (KO +2.06%) has risen nearly 25%. That last comparison is probably more important than the comparison to the S&P 500. Here's why.
PepsiCo is working through a rough patch
The consumer staples sector is facing some material headwinds. Inflation is increasing operating costs. Consumers are tightening their belts, putting pressure on revenues. And consumer tastes are shifting in a healthy direction, which is a headwind for snack makers and packaged food companies like PepsiCo.
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PepsiCo isn't doing badly, but it isn't doing particularly well, either. In the second quarter of 2026, organic sales rose 2.4%, down from 2.6% in the first quarter. That's OK for a consumer staples company. But the company's main competitor in the beverage space, Coca-Cola, posted 6% organic sales growth in the second quarter. Sure, that was down from 10% in the first quarter, but Coca-Cola is clearly beating PepsiCo right now.
PEP PepsiCo
NASDAQ · As of 4:00 PM ET 10/16/26
There are many reasons to like PepsiCo as a long-term investment. For example, it is a Dividend King with over 50 consecutive annual dividend increases, showing it knows how to survive difficult periods. The stock sell-off has left the stock with a historically high 4.5% yield. And despite the relatively weak performance, it remains a financially strong and highly profitable business, with leading positions in beverages, salty snacks, and packed food products. Even after the stock has lost a third of its value since 2023, it remains one of the world's largest and most diversified consumer staples companies. However, investors still appear to be taking a cautious stance amid rising risks in the broader consumer staples sector.
Coca-Cola wins this head-to-head from a business perspective
So, the real reason that PepsiCo is falling behind the S&P 500 is likely that it is falling behind Coca-Cola from a business perspective. Investors are simply reacting to this dynamic and buying the stronger-performing business. However, if you think in decades and not days, PepsiCo could still be an attractive choice for more adventurous investors. After all, this Dividend King's long, successful history suggests it will eventually adjust to current headwinds and thrive again.
