Soft Drink Manufacturing (United States) — NAICS 312111

A Histometrics industry primer for public-market and private investors.

1. Overview

Soft drink manufacturing is the business of turning flavor concentrate, sweetener, water, and carbon dioxide into the packaged carbonated and non-carbonated drinks — colas, energy drinks, sparkling waters, sports drinks — that sit on U.S. shelves. It is one of the most profitable and most concentrated corners of the food-and-beverage economy, dominated by a handful of enormous branded companies and their bottlers.

Why an investor should care: this is a defensive, cash-generative consumer-staples category. Demand is steady and repeat-purchase, brands are powerful moats, and the economics of the leaders — especially the concentrate makers — are among the best in all of manufacturing. The tension is that traditional sugary soda is in slow structural decline in the U.S., so the growth is migrating toward energy drinks, sparkling water, and "better-for-you" formulations.

Public-market investors have unusually clean access: The Coca-Cola Company, PepsiCo, Keurig Dr Pepper, Monster Beverage, Celsius, National Beverage, and Zevia are all listed, spanning the full value chain from brand owner to bottler. Private capital plays through contract bottlers, regional franchise bottlers, and privately held brands (Red Bull, Jarritos), where the returns come from routes, plants, and distribution rather than brand ownership.

2. What it is and how it's structured

Scope. NAICS (North American Industry Classification System) code 312111 covers establishments primarily engaged in manufacturing soft drinks and artificially carbonated waters.[1] In practice the Census questionnaire includes carbonated and noncarbonated soft drinks, fruit drinks and ades, club soda, sparkling and flavored waters, and nondairy bottled coffee and tea — a broader set than just "soda."[2]

What it excludes — this matters a lot here. The code deliberately carves out several adjacent activities:[1]

• Flavoring syrup and concentrate — NAICS 311930. This is the single most important exclusion. The secret formulas and concentrate that Coca-Cola and PepsiCo sell to bottlers are classified here, not in 312111.
• Bottled water (non-carbonated) — NAICS 312112.
• Fruit and vegetable juice canning — NAICS 311421; milk-based drinks — 311511; non-alcoholic beer — 312120; non-alcoholic wine — 312130.

The physical process is generally water treatment, ingredient and concentrate blending, sweetening, carbonation where applicable, high-speed filling into cans or PET/glass bottles, secondary packaging, warehousing, and distribution. The product is heavy relative to its value, so plant location, line utilization, and delivery density matter. Producers use both warehouse delivery — shipping pallets to retailer distribution centers — and direct-store delivery, in which route drivers deliver, stock, and merchandise stores. Fountain syrup follows another route through restaurants and other on-premise accounts.

Ownership mix. The industry runs on a two-tier "concentrate + franchise bottling" structure:

• Brand owners / concentrate makers (The Coca-Cola Company, PepsiCo, Keurig Dr Pepper) own the formulas, trademarks, and marketing, and sell concentrate to bottlers. Coca-Cola reported that concentrate operations supplied 59% of its 2025 revenue and finished-product operations 41%.[3]
• Bottlers — some company-owned, many independent franchisees — buy concentrate, add water/sweetener/packaging, and handle production, distribution, and local sales. Coca-Cola Consolidated is the largest independent U.S. Coca-Cola bottler; Polar Beverages describes itself as the largest independent U.S. bottler with owned brands plus private-label manufacturing;[4] Reyes Coca-Cola Bottling and Refresco are other large operators.

A third slice is the vertically integrated challengers (Monster, National Beverage, Celsius, Red Bull) that own brands but outsource or self-manage production without the classic franchise split.

3. How big it is

Federal statistics measure the factory-gate value of U.S. soft-drink manufacturing — not retail sales.

Two honest caveats about these figures:

1. They are much smaller than the "soft drinks market" you'll see quoted elsewhere. Market researchers put the broad U.S. soft-drinks retail market in the low-to-mid hundreds of billions (one estimate: ~$286 billion in 2023),[8] while a narrower U.S. carbonated-soft-drink retail market was estimated at $55.8 billion in 2025.[9] But those numbers bundle in retail and foodservice markup and incorporate wholesale and retail margins. The $41.7 billion is the value the manufacturing plants themselves ship.[5]

2. The industry's most valuable activity is classified elsewhere. Because concentrate and syrup sit in NAICS 311930, the enormous, high-margin profit pool of the brand owners does not show up in the 312111 receipts.[1] So 312111 captures the capital-intensive, lower-margin bottling half of the business, while the profit engine is reported in a different code and at the parent-company level. This is not a "tiny-operator undercount" problem (the industry is the opposite of fragmented) — it is a classification split that makes 312111 understate the industry as consumers experience it.

Concentration. This is a highly consolidated industry. The four largest firms account for 48.2% of receipts, the top eight for 60.9%, the top 20 for 79.8%, and the top 50 for 93%.[5][10] (The Herfindahl-Hirschman Index, a standard concentration measure, is suppressed in the federal data.[5]) Coca-Cola brands alone hold roughly 48% of the U.S. soft-drink market by one measure;[11] Beverage Digest data put Coca-Cola Classic at 18.5% of U.S. CSD volume in 2025 and Dr Pepper at 8.8% (brand shares, not company shares).[12]

4. The investable universe

Unusually for a Histometrics industry, the public options are abundant and span the whole value chain.

Major private and other owners:

• Red Bull (Austria, privately held) — the dominant energy-drink brand, not directly investable.
• Refresco (majority-owned by KKR, with PAI Partners and BCI retaining minority interests) — the world's largest independent contract bottler; bought three plants from Coca-Cola and produces both retailer private-label and branded drinks.[20][21]
• Polar Beverages (family-owned) — describes itself as the largest independent U.S. bottler, with owned brands plus private-label manufacturing and distribution.[4]
• Reyes Coca-Cola Bottling and other large regional franchise bottlers — privately held.
• Novamex/Jarritos, Olipop, Poppi (acquired by PepsiCo in 2025), and a long tail of craft/regional sodas.

Note: KDP announced an intended separation into two public companies (beverages and coffee), which if completed would change the public-market landscape.[14]

Takeaway: public investors can pick their exposure precisely — the ultra-high-margin brand owner (KO), the diversified food-plus-beverage giant (PEP), the pure-play bottler (COKE), or the growth challengers (MNST, CELH). Private investors gravitate to bottling/contract-manufacturing assets and emerging brands.

5. How the money works

The economics split sharply by where you sit in the chain.

Concentrate makers earn the fat margins. A brand owner like Coca-Cola sells concentrate to bottlers and books that revenue upfront, with almost no working-capital risk. Concentrate operations run gross margins around 60% and returns on invested capital of 20–30%+, because the model requires little physical capital relative to the earnings it throws off.[22][23] The moat is the brand plus the exclusive-territory franchise contract that obliges bottlers to buy the concentrate.

Bottlers earn thinner margins on heavy capital. Bottlers carry the cost of water, sweetener, packaging (resin, aluminum, glass), plants, warehouses, and delivery fleets. Coca-Cola Consolidated reported a 39.7% gross margin in 2025; aluminum costs and import tariffs reduced that margin year-over-year.[16] When fuel, aluminum, or labor costs spike, bottlers absorb the hit first while the concentrate maker keeps collecting. Their profit levers are volume (case sales), price/mix (premium packs and brands), plant capacity utilization, and route/distribution density.

The key cost exposures: Coca-Cola Consolidated identifies aluminum, corn, and PET resin as key commodity exposures and crude oil as a delivery-fuel exposure.[16] KDP says ingredients and packaging represented approximately 55% of its 2025 cost of sales (though that disclosure includes its coffee business).[14] Companies use supplier agreements, fixed-price contracts, and commodity derivatives to delay or reduce — but not eliminate — these exposures.

The key metrics to watch across the industry:

• Unit case volume and organic revenue growth — is the company selling more liquid, or just raising price?
• Price/mix — the split of growth between higher prices and richer product mix (energy and premium water carry more margin than mainstream cola).
• Input costs — aluminum, PET resin, sugar/high-fructose corn syrup, and freight drive the bottler cost line.
• Capacity utilization — bottling is a fixed-cost manufacturing business; running plants full is what makes them profitable.
• Seasonality — ready-to-drink volume is historically highest in the second and third calendar quarters; cold-beverage sales are generally higher in warmer months.[3][14]

6. What drives demand

• Population and per-capita consumption. Total demand tracks population, but U.S. per-capita soft-drink consumption has been slowly shrinking — an annualized decline of about 0.4% from 2020 to 2025 — as health concerns weigh on both sugary and diet soda.[24]
• The shift to "better-for-you." Sparkling water, zero-sugar sodas, and functional/energy drinks are taking share from traditional sugared carbonated soft drinks. About 38% of 2024 global beverage launches were sugar-free or low-sugar.[25] In mid-2025, PepsiCo said 60% of its beverage volume in major markets came from low- or no-sugar products.[26]
• Price/mix can grow even when volume declines. PepsiCo Beverages North America revenue rose 1.5% in 2025, but unit volume declined 3%; noncarbonated volume fell 6% and CSD volume declined slightly.[13] Coca-Cola's global organic revenue rose 5%, driven by 4% price/mix and only 1% concentrate-sales growth.[27] Smaller packages can raise revenue per ounce; convenience and foodservice usually carry different economics from grocery multipacks.
• Energy drinks — the growth engine. Energy is the fastest-growing large category, powering Monster, Celsius, and Red Bull and pulling Coca-Cola and PepsiCo in through investments and acquisitions.
• Demand is defensive but not completely acyclical. Consumers continue buying beverages during downturns, yet they can shift from foodservice to at-home consumption, from premium or single-serve packages to multipacks, or toward private label.
• The GLP-1 wildcard. Appetite-suppressing weight-loss drugs are a forward-looking uncertainty for calorie-dense drinks; the near-term impact on soft-drink volumes remains debated rather than proven.

7. Regulation

• Food safety and labeling sit with the U.S. Food and Drug Administration (FDA) — ingredient rules, additives, artificial dyes, and nutrition/"added sugars" labeling. Packaged drinks with added sugars must disclose grams and percentage Daily Value; FDA's Daily Value is 50 grams on a 2,000-calorie diet.[28][29] Additive and dye scrutiny has intensified.
• Local soda taxes. A handful of jurisdictions levy per-ounce sweetened-beverage taxes: Boulder (2¢/oz), Seattle (1.75¢/oz), Philadelphia (1.5¢/oz), the four California cities of Albany, Berkeley, Oakland, and San Francisco (1¢/oz each), plus a special sales-tax rate in Washington, D.C.[30] Studies find these taxes meaningfully cut sugary-drink purchases — one five-city study found a ~33% drop.[31]
• State preemption. California's 2018 "Keep Groceries Affordable Act" blocks new local soda taxes until 2031; Santa Cruz became the first city to defy that ban with a 2¢/oz tax, setting up a legal fight.[32] Preemption laws in several states similarly shield the industry from a wider spread of local taxes.
• SNAP restrictions and "MAHA." Under the "Make America Healthy Again" agenda, USDA's page updated in March 2026 listed approved SNAP food-restriction waivers in 22 states, most restricting soda, soft drinks, energy drinks, or other sweetened beverages, with implementation dates varying by state.[33] This creates direct category exposure and substantial retailer-system complexity because definitions differ across states.
• Formulation pressure. Political and consumer pressure on sweeteners is real: in 2025 Coca-Cola announced a U.S. cane-sugar version of its cola amid the MAHA push.[34]
• Packaging regulation. Tariffs can raise aluminum costs; recycled-content mandates, container-deposit systems, and extended-producer-responsibility programs can increase compliance and capital requirements.

8. Competitive dynamics and consolidation

This is a mature, oligopolistic industry. Two facts define the competitive game:

1. Brand power plus shelf and cooler access are the moats. Distribution scale, retailer relationships, and marketing spend keep new entrants out of mainstream channels — which is why challengers (Celsius, Poppi, Olipop) grow fastest in energy and functional niches before the giants either copy them or buy them.

2. Consolidation runs in both directions. The brand owners have spent the last 15 years reshuffling bottling: Coca-Cola refranchised company-owned territories to independents like Coca-Cola Consolidated and Refresco to shed capital intensity, while PepsiCo did the reverse at times, buying its two largest bottlers back in-house. On the brand side, the giants continually acquire high-growth challengers (PepsiCo–Poppi, Coca-Cola's energy and water bets) rather than let them scale independently.

Retailer power is a constraint. Large customers demand promotional funding, shelf-placement payments, and dependable service. Walmart and Sam's represented approximately 14% of PepsiCo's 2025 consolidated revenue, including concentrate ultimately used in products sold through those retailers — demonstrating the bargaining importance of major accounts.[13]

The result: a stable core of leaders with pricing power, ringed by a churn of emerging brands that are effectively an outsourced R&D and acquisition pipeline for the majors.

9. Risks

• Structural volume decline in traditional sugary and diet soda as health preferences shift.[24]
• Regulatory and tax pressure — soda taxes, SNAP exclusions, dye/additive rules, and reformulation mandates raise cost and dampen demand.[30][31][33]
• Input-cost and freight inflation — aluminum, resin, sweetener, and fuel hit bottler margins directly.[16][22]
• GLP-1 weight-loss drugs — an unproven but plausible drag on calorie-dense beverage demand.
• Concentration/single-brand risk — challengers like Celsius and Zevia depend heavily on one category or a few distribution partners; a distribution change can swing results sharply.
• Private-label and contract-manufacturing competition — retailers' own sparkling waters and sodas, made by contract bottlers like Refresco, pressure mainstream pricing.[20]
• Labor exposure — plants, warehouses, truck fleets, and merchandising are labor-intensive. KDP reported approximately 23,200 U.S. employees in 2025, including approximately 5,700 covered by collective-bargaining agreements; wage inflation, driver shortages, strikes, and safety incidents can impair service levels.[14]
• Substitution is unusually broad — a soda competes not only with another soda but with tap and bottled water, coffee, tea, milk, juice, energy drinks, sports drinks, alcohol, powdered mixes, and at-home carbonation.

10. How to invest and the outlook

Public routes.

• Highest-quality compounder: The Coca-Cola Company (KO) — the concentrate model's ~60% gross margins and high returns on capital make it a classic defensive dividend holding.[22][3]
• Diversified staple: PepsiCo (PEP) — beverages plus a large snacks business (Frito-Lay) that cushions soda softness.[13]
• Growth tilt: Monster (MNST) and Celsius (CELH) for energy-drink exposure; National Beverage (FIZZ) and Zevia (ZVIA) for sparkling water and zero-sugar.[15][17][18][19]
• Pure bottler: Coca-Cola Consolidated (COKE) — a leveraged play on U.S. case volume, price/mix, and plant efficiency rather than brand ownership.[16]
• Reserve tickers, dividend yields, and valuation multiples for your own screening; the point here is that each seat in the value chain is separately investable.

Private routes. Contract and franchise bottling (the Refresco/Reyes/Polar model), regional distribution routes, and early-stage functional-beverage brands are where private and private-equity capital concentrate — returns come from operational scale, route density, and eventual acquisition by a major.[4][20] The economics differ sharply: brands are marketing- and intellectual-property-led but distribution-dependent; co-manufacturers are asset-heavy and win through capacity, quality, format capability, and customer contracts; distributors depend on territory density and supplier relationships.

Near-term drivers (forward-looking). The center of gravity keeps moving from sugared cola toward energy, sparkling water, and zero-sugar. Expect the majors to defend margins through price/mix and to keep acquiring fast-growing challengers, while regulation (soda taxes, SNAP exclusions, sweetener politics) and the GLP-1 question act as slow headwinds on sugary volume. The base case is a low-growth, high-cash-generation industry whose leaders stay highly profitable even as the underlying soda category gently shrinks — with the upside residing in whoever wins the functional-and-energy transition.

---

Sources

1. U.S. Census Bureau / NAICS, "NAICS Code 312111 — Soft Drink Manufacturing (definition and exclusions)," 2022. https://www.census.gov/naics/?details=31211&input=31211&year=2022
2. U.S. Census Bureau, 2022 Economic Census Questionnaire MC-31211. https://bhs.econ.census.gov/ombpdfs2022/export/2022_MC-31211_su.pdf
3. The Coca-Cola Company, 2025 Form 10-K. https://www.sec.gov/Archives/edgar/data/21344/000162828026010047/ko-20251231.htm
4. Polar Beverages, "About Us." https://polarbeverages.com/about/
5. U.S. Census Bureau, 2022 Economic Census — Concentration by Largest Firms (NAICS 312111: receipts, firm count, CR4/CR8/CR20/CR50, HHI suppressed). https://www.census.gov/programs-surveys/economic-census.html
6. U.S. Census Bureau, County Business Patterns 2023 (NAICS 312111: establishments, employment, payroll). https://www.census.gov/programs-surveys/cbp.html
7. U.S. Small Business Administration, Table of Size Standards, 2023 (NAICS 312111: 1,400 employees). https://www.sba.gov/document/support-table-size-standards
8. Novaone Advisor / Grand View Research, "U.S. Soft Drinks Market Size," 2024. https://www.novaoneadvisor.com/report/us-soft-drinks-market
9. Beverage Industry, "2026 State of the Beverage Industry: Carbonated Soft Drink Market," 2026. https://www.bevindustry.com/articles/98501-2026-state-of-the-beverage-industry-carbonated-soft-drink-market-meets-consumer-trends
10. Iowa State University CARD, "Beverage Industry Concentration Study," 2026. https://www.card.iastate.edu/files/publications/pdf/26PB51.pdf
11. Statista, "Soft drink market share in the U.S. by company, 2024," 2024. https://www.statista.com/statistics/225464/market-share-of-leading-soft-drink-companies-in-the-us-since-2004/
12. Atlanta Journal-Constitution, "Coke rival Pepsi climbs up among top U.S. soda brands," 2026. https://www.ajc.com/business/2026/04/coke-rival-pepsi-climbs-up-among-top-us-soda-brands-besting-sprite/
13. PepsiCo, Inc., 2025 Form 10-K. https://www.sec.gov/Archives/edgar/data/77476/000007747626000007/pep-20251227.htm
14. Keurig Dr Pepper Inc., 2025 Form 10-K. https://www.sec.gov/Archives/edgar/data/1418135/000141813526000016/kdp-20251231.htm
15. Monster Beverage Corporation, 2025 Form 10-K. https://www.sec.gov/Archives/edgar/data/865752/000110465926020831/mnst-20251231x10k.htm
16. Coca-Cola Consolidated, Inc., 2025 Form 10-K. https://www.sec.gov/Archives/edgar/data/317540/000162828026009057/coke-20251231.htm
17. Celsius Holdings, Inc., Fourth Quarter and Full Year 2025 Results. https://www.sec.gov/Archives/edgar/data/1341766/000134176626000017/ex9914q20251.htm
18. National Beverage Corp., Fiscal 2024 Annual Report. https://www.sec.gov/Archives/edgar/data/69891/000143774924028674/nbcars.pdf
19. Zevia PBC, "Fourth Quarter and Full Year 2024 Results," 2025. https://investors.zevia.com/news/news-details/2025/Zevia-Announces-Fourth-Quarter-and-Full-Year-2024-Results/
20. Refresco, "About Us," 2024. https://www.refresco.com/en/about-us/
21. Business Wire / KKR, "KKR to Acquire Majority Stake in Refresco," 2022. https://www.businesswire.com/news/home/20220222005726/en/KKR-to-Acquire-Majority-Stake-in-Refresco
22. Latterly.org, "Coca-Cola Business Model: Concentrate Sales and Franchise Bottling," 2024. https://www.latterly.org/coca-cola-business-model/
23. The Motley Fool, "Why Coca-Cola's Business Model Still Wins After 100 Years," 2025. https://www.fool.com/investing/2025/11/21/why-coca-colas-business-model-still-wins-after-100/
24. IBISWorld, "Per capita soft drink consumption in the US (1980-2031)," 2025. https://www.ibisworld.com/united-states/bed/per-capita-soft-drink-consumption/1786/
25. Cascadia Managing Brands, "2024 Beverage Trends: Winners and Losers," 2025. https://cascadiafoodbev.com/2024-beverage-trends-insights-into-winners-and-losers/
26. Associated Press, "PepsiCo says 60% of beverage volume from low- or no-sugar products," 2025. https://apnews.com/article/0404b23518e65e2e6cd3487381411d7f
27. The Coca-Cola Company, "Fourth Quarter and Full Year 2025 Results." https://www.sec.gov/Archives/edgar/data/21344/000162828026006642/a2025q4earningsreleaseex-9.htm
28. U.S. Food and Drug Administration, "Carbonated Soft Drinks: What You Should Know." https://www.fda.gov/food/buy-store-serve-safe-food/carbonated-soft-drinks-what-you-should-know
29. U.S. Food and Drug Administration, "Added Sugars on the Nutrition Facts Label." https://www.fda.gov/food/nutrition-facts-label/added-sugars-nutrition-facts-label
30. Tax Policy Center, "How do state and local soda taxes work?" 2024. https://taxpolicycenter.org/briefing-book/how-do-state-and-local-soda-taxes-work
31. Boston University School of Public Health, "Sugary Drink Tax Prompts Substantial Decline in Purchases," 2024. https://www.bu.edu/sph/news/articles/2024/sugary-drink-tax-prompts-substantial-decline-in-purchases/
32. U.S. News / AP, "Northern California town's sugary soda tax is first to defy state ban," 2025. https://www.usnews.com/news/us/articles/2025-05-01/northern-california-towns-sugary-soda-tax-is-first-to-defy-state-ban
33. U.S. Department of Agriculture Food and Nutrition Service, "SNAP Food Restriction Waivers," updated March 2026. https://www.fns.usda.gov/snap/waivers/foodrestriction
34. Food Dive, "How MAHA transformed the food industry in 2025," 2025. https://www.fooddive.com/news/maha-food-ingredients-rfk-artificial-dyes/808286/