In marketing, perception has long been the battlefield where Coca-Cola and PepsiCo clash. Campaigns, slogans, and celebrity endorsements defined the cola wars for over a century. Yet, in 2025, a new and less visible force is tilting the scales—U.S. trade policy. The tariffs introduced during Donald Trump’s administration, particularly a 10% levy on soda concentrate imports and a 25% tariff on aluminum, have transformed supply chains into strategic vulnerabilities. PepsiCo is feeling more pressure than its Atlanta-based rival.

At the heart of this shift lies a decades-old decision by PepsiCo to centralize much of its concentrate production in Ireland. What once was a smart tax strategy—leveraging Ireland’s low corporate tax rates—has become a costly miscalculation. Nearly all the concentrate for Pepsi and Mountain Dew destined for U.S. consumers is now subject to tariffs imposed in recent years. Coca-Cola, by contrast, produces most of its focus domestically in Atlanta and Puerto Rico, insulating itself from these added costs. As Carlos Laboy of HSBC noted in early 2025, while Ireland had long been a fiscal haven, no one anticipated tariffs would turn that advantage into a liability.

A Perfect Storm for Pepsi

Timing, in business as in politics, is everything. The imposition of tariffs has arrived at a particularly vulnerable moment for PepsiCo. The company’s U.S. market share has been steadily eroding over the past two decades, culminating in 2024 when Dr Pepper surpassed Pepsi-Cola to claim the title of America’s second most popular soda. According to NPR, Dr Pepper edged ahead with an 8.3% share, narrowly overtaking Pepsi’s 8.31%.

This decline is more than a statistic—it reflects deeper challenges in Pepsi’s brand positioning and product strategy. While Coca-Cola has remained steadfast in its messaging—anchored in themes of nostalgia, unity, and consistency—Pepsi has juggled its identity, shifting between pop culture relevance and diversification into snacks and energy drinks. In a tariff-inflated market, such fragmentation becomes costly, especially when increasingly price-sensitive consumers seek clear value propositions.

When Supply Chains Become Marketing Risks

For years, globalization offered companies like PepsiCo a path to maximize efficiency and minimize taxes. However, the resurgence of protectionist policies has reframed global supply chains as potential weaknesses. The 10% tariff on concentrate is more than a logistical hurdle—it’s a marketing problem. Rising production costs risk translating into higher retail prices, undermining Pepsi’s ability to compete, particularly when brand loyalty is already under strain.

Independent bottlers, many of whom are family-owned and already grappling with declining sales, anticipate that these tariffs will further erode margins. Without clear guidance from PepsiCo on mitigation strategies, concerns are mounting that increased costs will either be passed on to consumers or absorbed by businesses already operating on thin margins.

While not entirely immune—given its exposure to the 25% aluminum tariff—Coca-Cola has demonstrated greater agility. CEO James Quincey indicated earlier this year that the company could pivot toward increased use of plastic packaging or source aluminum domestically to soften the blow. Coca-Cola’s operational flexibility and robust brand equity provide a buffer that Pepsi currently lacks.

The Unlikely Beneficiary of Market Disruption

Amid the turbulence, Dr Pepper has emerged as a quiet victor. Its ascent is not merely due to the missteps of its rivals but is also a testament to savvy marketing and an understanding of evolving consumer preferences. The brand has positioned itself as distinct and culturally relevant by embracing quirky, individualistic branding and capitalizing on viral social media trends such as the “Dirty Dr Pepper” craze. Unlike Pepsi and Coke, Dr Pepper’s success is less dependent on traditional cola loyalty and more on capturing niche markets and younger demographics.

Consumer Behavior in a Tariff-Driven Economy

The impact of tariffs extends beyond corporate balance sheets—reshaping consumer behavior. A 2024-2025 survey revealed that 35% of U.S. consumers have shifted toward private-label sodas or discount brands in response to rising prices, particularly pronounced among Gen Z and budget-conscious shoppers. In this climate, Coca-Cola’s emotional branding—rooted in campaigns like “Share a Coke”—provides resilience. Consumers tend to tolerate modest price increases when the brand relationship feels personal and meaningful.

Pepsi, traditionally positioned as the youthful challenger, now finds itself squeezed. It struggles to justify premium pricing without a unified brand story and higher production costs. The ongoing health and wellness movement, which continues to steer consumers toward zero-sugar options, sparkling waters, and functional beverages, only adds to the headwinds facing traditional sodas.

Consistency vs. Adaptation

Coca-Cola’s marketing remains a masterclass in consistency. Its 2025 “Returnable Revolution” campaign reinforces sustainability credentials and aligns with consumer expectations in an environmentally conscious market. Tapping into global events like the Olympics further cements its place as a brand with heritage and purpose.

PepsiCo, meanwhile, has leaned heavily into digital-first campaigns, TikTok challenges, and celebrity endorsements. Yet, critics argue that these efforts, while flashy, lack coherence. In a marketplace where consumers are increasingly discerning—and where price sensitivity is rising—clarity and consistency in messaging are more valuable than ever.

The New Frontlines of the Cola Wars

The Trump-era tariffs have redefined the dynamics of one of America’s most iconic brand rivalries. No longer confined to advertising creativity or shelf space competition, the cola wars play out in boardrooms, supply chain strategies, and international trade policies.

PepsiCo faces a critical juncture. To regain footing, it must reassess its production footprint, streamline its marketing narrative, and reconnect with consumers in ways that transcend price. Coca-Cola, while better positioned, cannot afford complacency—especially with Dr Pepper’s innovative tactics gaining traction.

In this evolving landscape, the winners will be those who understand that in 2025, marketing is not just about selling a product—it’s about navigating a world where policy, perception, and consumer priorities intersect more tightly than ever.

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