KANSAS CITY — It’s notable that major beverage companies like The Coca Cola Co., Monster Beverage Corp. and PepsiCo Inc. have all entered the alcoholic beverage space — some in a limited fashion — during the past few years. Yet seeing the shifts transpiring in the market raises questions over whether the investments are meeting expectations.

The Coca-Cola Co. was an early mover in the sector, partnering with Molson Coors Beverage Co. to introduce Topo Chico Hard Seltzer in 2020 and later the Simply Spiked line, Fresca branded cocktails with Constellation Brands, Inc., Jack and Coke in partnership with Brown-Forman’s Jack Daniel’s brand, and, most recently, Bacardi and Coke with Bacardi Ltd.

Coca-Cola Co. management has been clear the initiatives are tests, and it may take 7 to 10 years to determine if the business is scalable.

In 2022, PepsiCo Inc. entered a partnership with the Boston Beer Co. to market Hard Mtn Dew, and that same year Monster Beverage entered the category by acquiring the Canarchy Craft Brewery for $330 million. At the time, Hilton Schlosberg, Monster’s co-chief executive officer, said the acquisition would provide the company a springboard to enter the alcohol business. Almost three years later the acquisition is proving to be a drag on performance.

The alcoholic beverage market faced several headwinds in 2024, including a shift to moderation and a decline in off-premises sales, particularly for beer, wine and spirits, according to the market researcher NielsenIQ. Total category sales dipped less than 1% to $112.9 billion.

In 2025, the category is beginning to feel the effects of tariffs on aluminum and steel, which prompted the ratings agency Fitch Ratings changed its outlook for the global alcoholic beverage market from “neutral” to “deteriorating.”

Neither Coca-Cola nor PepsiCo have disclosed how well their tests are progressing. The product lines are minuscule relative to the companies’ vast beverage portfolios. But the struggles Monster Beverage has faced are considerable. The company reported a $131 million impairment charge against its alcohol brands business unit in March. During the company’s 2025 first quarter, reported in May, net sales of alcohol brands fell to $35 million, compared to $56 million a year ago — a decrease of 38%.

The trends negatively affecting the alcohol market are varied. In the near term, inflation has deterred customers from premium products, and the recent tariffs imposed on aluminum and steel are expected to add additional pressure on the category.

More striking for the longer term is younger consumers — particularly Generation Z — are drinking less than previous generations in the same age range. Some market researchers have speculated that the diminished intake reflects health concerns, but a report published by Rabobank in April said the softness is due to financial constraints and that consumption by younger consumers will pick up as they earn more.

Either conclusion leaves consumer packaged goods companies interested in exploring the market for alcoholic beverages in a bind. Is the market funk a byproduct of current economic conditions or does it reflect a growing awareness among consumers about the negative effects alcohol may have on their health and wellness? The answer to that question may play out over time in other food and beverage categories.