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Investing.com - Non-alcoholic beverage companies are showing stronger performance than food and alcohol producers amid persistent consumer uncertainty, according to a new Piper Sandler report following second-quarter 2025 earnings. This trend is evident in the food sector, where major players like Tyson Foods (NYSE:TSN) have seen gross profit margins compress to just 7.77% in recent quarters.
The research firm expressed bullishness on Coca-Cola (NYSE:KO), Keurig Dr Pepper (NASDAQ:KDP), Celsius Holdings (NASDAQ:CELH), and Monster Beverage (NASDAQ:MNST), while suggesting companies like PepsiCo (NASDAQ:PEP) and Utz Brands (NYSE:UTZ) may require more patience for category improvement. Get deeper insights into these beverage giants with InvestingPro, which offers comprehensive analysis and Fair Value estimates for over 1,400 US stocks.
North American non-alcoholic beverage volumes grew 0.7% in Q2 2025, contrasting with a 1.7% decline in food volumes and a steeper 4.1% drop in alcohol volumes, according to the report. Price/mix increased across categories, with non-alcoholic beverages rising 2.5%, food up 2.4%, and alcohol gaining 1.9%. This aligns with InvestingPro data showing food producers like Tyson Foods struggling with revenue growth of just 1.99% over the last twelve months.
Piper Sandler noted that uncertainty around tariffs and potential inflation has made consumers more value-conscious, driving shifts to club stores for better unit value and dollar stores for smaller cash outlays. Companies have implemented few tariff-driven price increases so far, but consumer caution persists. According to InvestingPro Tips, this trend has particularly impacted food producers, with several analysts revising earnings expectations downward for the upcoming period.
The report identified salty snacks as "more discretionary" and "structurally more cyclical" than previously thought, while carbonated soft drinks and energy drinks remained resilient with category growth of 3.5% and 14.4% respectively in Q2 2025, according to SPINS/IRI data.
In other recent news, Tyson Foods reported better-than-expected earnings for the third quarter of 2025. The company achieved an adjusted earnings per share of $0.91, surpassing the forecast of $0.81, while revenue reached $13.88 billion, exceeding the expected $13.54 billion. This marks the fifth consecutive quarter of year-over-year growth in sales, operating income, and EPS. Additionally, Tyson Foods declared a quarterly dividend of $0.50 per share for Class A common stock and $0.45 for Class B, payable in December 2025. The company also expanded its share repurchase program by authorizing an additional 43 million shares for repurchase. In corporate governance news, Tyson appointed Sarah Bond, President of Xbox, as a new independent director on its board. Analyst firms have maintained a cautious outlook, with Bernstein SocGen lowering its price target to $58 due to challenges in the beef sector, while Piper Sandler kept its Neutral rating with the same price target. Tyson’s performance in the chicken segment was noted as a positive factor by analysts.
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