Pepsi’s resurgence begins not with a flashy ad, but in the fluorescent-lit aisles of a Dollar General at dawn. That’s where Ram Krishnan, CEO of PepsiCo Beverages North America since February 2024, has been showing up—clipboards in hand, inspecting shelf space, cooler placement, and product tags. This is ground zero for a brand on the defensive.
Once a central player in the cola wars of the 1970s and 1980s, Pepsi has seen its position erode significantly. In 2023, Beverage Digest reported that U.S. sales volume for Pepsi’s cola portfolio—including Diet Pepsi and Pepsi Zero Sugar—had plunged 32% since 2010. Even Coca-Cola, hit by the same health-conscious consumer wave, saw a less dramatic 14% drop. In a stunning twist, Dr Pepper overtook Pepsi as the nation’s second most popular soda.
During a frank moment in February 2024, PepsiCo CEO Ramon Laguarta addressed analysts in Orlando, admitting, “We are disappointed we have not been able to gain share in the last few years. It’s a miss, I would say, from our side.” This candor marked a tone shift and signaled a willingness to change course.
A Comeback Plan Built on Taste and Visibility
The new strategy is both a throwback and a reinvention. Pepsi has revived its legendary “Pepsi Challenge” from the ’70s and ’80s, this time targeting Pepsi Zero Sugar against Coca-Cola Zero Sugar. Launched in February 2025 during Super Bowl LIX in New Orleans, the campaign pushes the idea that “Food Deserves Pepsi”—aiming to reassert taste as Pepsi’s defining strength. The campaign mixes in-store taste tests with digital media and influencer-led content, tailored to appeal to Millennials and Gen Z.
Simultaneously, Krishnan has launched an aggressive retail execution plan. Starting in February 2024, he’s been crisscrossing the U.S., inspecting displays, and coaching local teams on merchandising. This “shelf war” is about winning at the point of sale, where beverage decisions are often made.
Product Innovation and Marketing Reinvention
Reclaiming shelf space isn’t enough. PepsiCo is also rolling out new products, including Starry, a lemon-lime soda launched in January 2023 to replace Sierra Mist and appeal to Gen Z. Its performance has been mixed. It delivered an initial burst of attention that required continued investment to sustain.
More promising has been Pepsi Zero Sugar, which, alongside Wild Cherry Pepsi, saw double-digit growth in early 2025. A humorous digital ad series launched in March 2024—dubbed the “Undercover Agent” campaign—has helped reframe the brand’s image as playful and modern, generating viral traction on TikTok and YouTube.
In April 2025, PepsiCo appointed a new Chief Marketing Officer for U.S. Beverages, Mark Kirkham, replacing Greg Lyons. The move reflects a deeper shift: re-centering the company’s focus on storytelling, health-conscious innovation, and brand identity—after years of leaning on its snack division, which now accounts for 58% of PepsiCo’s revenue.
Signals of Progress—but a Long Road Ahead
These efforts are beginning to show results. Pepsi’s flagship blue-can cola saw a 5.8% sales increase, while Pepsi Zero Sugar and Wild Cherry are gaining ground. But the competitive landscape remains brutal. Functional drinks, flavored seltzers, and better-for-you beverages continue to lure health-focused consumers. Even Gatorade, once a sports drink powerhouse, has lost its share, prompting PepsiCo to reposition it under the “Zero” banner.
Meanwhile, cultural sentiment isn’t helping. In 2024, Health and Human Services Secretary Robert F. Kennedy Jr. called sugary sodas “poison,” highlighting the growing regulatory and reputational pressure traditional sodas face.
What Comes Next for Pepsi?
Pepsi must go further than nostalgia and shelf checks to maintain momentum. Several next steps could define whether the brand’s recovery holds:
First, the company must lean into hyper-personalization. AI and machine learning could be used to deliver micro-targeted campaigns and interactive packaging, including QR codes that offer customized content or loyalty perks.
Second, Pepsi must continue to expand its health-focused beverages, from gut-health sodas to all-natural sweetened colas that use stevia and monk fruit. Consumers are no longer swayed by “diet” labels—they want authenticity and function.
Third, engaging Gen Z through co-creation platforms and purpose-driven branding is essential. Inviting consumers to help shape new flavors or packaging or promoting sustainable initiatives can help rebuild loyalty in an era defined by identity-driven purchasing.
Finally, direct-to-consumer innovations, like limited-edition drops or subscription kits, can create buzz and bring Pepsi back into the conversation—especially among digitally native consumers.
Conclusion: A Legacy Brand at a Crossroads
Pepsi’s challenge isn’t just about reclaiming market share but redefining what the brand stands for in 2025 and beyond. The return of the Pepsi Challenge signals confidence, but success will depend on how deeply PepsiCo is willing to rethink its approach, from ingredients to experience.
Krishnan’s pre-dawn store visits and Kirkham’s new marketing vision reflect a company that’s finally treating its beverage business like it matters again. Whether that’s enough to reverse over a decade of decline remains an open question. But one thing is clear: the new Pepsi Challenge is no longer just a taste test—it’s a fight for cultural relevance.
