Top 5 Food & Beverage Stocks With Strong Consumer Demand (2025)

Selling What People Need

A lot of attention in financial markets is given to “trendy” sectors. Biotech, EVs, IT, renewables, or even oil & gas, banks, etc. This makes sense, as these sectors are either crucial to the global economy or exhibit remarkable technologies and growth.

However, at the same time, it means that investors often overlook some other “boring” sectors. One such sector is the food and beverage industry. This is a segment of the economy everybody is exposed to daily, as, after all, everybody needs to eat.

It is also a sector with intense competition, where the only way to secure good margins is through high-quality brands. These brands can command extremely high loyalty from their consumers, with Coca-Cola’s business moat, created by its century-old brand, probably only equaled by superbrands like Apple or Tesla.

Still, because they are far from popular among most investors beyond committed value investors and unlikely to make the news headlines, stocks in this sector can be remarkably cheap despite great returns on invested capital or growth. This can create excellent long-term returns while also offering low volatility and steadily growing dividends.

Top 5 Food and Beverage Stocks for Consumer Demand

Coca-Cola is best known for its flagship sugary and bubbly soda. Building upon the basis and cash flow of soda sales, the company has grown into an international conglomerate in everything drinkable, holding many of the best brands on Earth in this segment.

This includes Fanta, Schweppes, Dasani, Fanta, Minute Maid, Sprite, Powerade, etc. Coca-Cola also has a 16.7% equity investment in the energy drink producer Monster. The company’s product lineup is slowly changing, with now 29% of sold volume of low or zero-calorie drinks.

While North America sales are still by far the core of the company, it also makes a lot from Latin America and Europe, with Asia-Pacific the region with the most growth potential.

Source: Coca Cola

The company sees a large opportunity in the people who are still not yet consumers of Coca-Cola products, especially in developing and emerging markets, where the growing middle class can start to afford “luxury” consumption like soda and premium soft drinks.

Source: Coca Cola

Coca-Cola’s business model focuses on brands, with the actual operation of producing and distributing the drinks locally licensed out to 200+ “bottlers” who buy from Coca-Cola concentrated products, put them into bottles, and handle the distribution.

This makes Coca-Cola an extremely capital-efficient business, with most of its spending from advertisement and marketing, leaving the capital-intensive business of building factories and bottling the drinks to its sub-contractors.

Source: Coca-Cola

This efficiency is also behind the rationale for Warren Buffett to have acquired a large stake in Coca-Cola in 1988, never selling it then, and currently owning a 9.2% stake in the whole company. Even when raising a record level of cash, Berkshire never sold any of the 400 million Coca-Cola shares it owns.

The company is aiming for 4-6% organic growth in the long term, a bit below its 7% average in the past 5 years. Thanks to solid margins and regular share repurchases, this should convert into long-term 7-9% growth of earnings per share.

Source: Coca-Cola

Coca-Cola brands are among the strongest and most recognized in the beverage market. It is also a company famous for being a compounding stock and growing dividends since the 1970s. This makes it a remarkably solid asset in a portfolio, one likely to reduce volatility and bring steady and growing returns, especially if investors reinvest regularly the money they get from dividends.

Mondelez International, Inc. (MDLZ +0.77%)

Mondelez is the leading company in the snack segment, with a global #1 position in biscuits, #2 in chocolate (only outdone by privately-owned Mars), and #3 in snack bars and cake & pastries. Regarding brands, the company offering includes Cadbury, 7 Days, Oreo, Milka, Toblerone, Tuc, Chips Ahoy, Cote d’Or,  Daim, Lu, Mikado, etc.

Source: Mondelez

The company was the result of the 2012 split of Kraft Foods Group, Inc. into two companies: Mondelēz International and Kraft Foods Group, Inc. The company has experienced an accelerating growth rate, with 5.7% in 2021, 10% in 2022, and 12.8% in 2023.

These core offerings have experienced strong growth over the last few years, with an exceptional 10% increase in 2022. This was partially driven by double-digit growth in emerging markets, especially Latin America, at 14.1% CAGR.

Source: Mondelez

The company is a serial acquirer, with 9 acquisitions completed since 2018, adding $2.8B in annual revenues compared to 2022 total revenues of $31.4B. Mondelex also divested for $1.4B Gum DM, a lollypops brand that was not directly aligned with the rest of the group’s brands.

Source: Mondelez

Thanks to share repurchases and growing dividends, the total shareholder returns have been at an annualized 15.1% since 2018.

Mondelez’s offering is highly diversified, with each product occupying a dominant position in its specific niche. When many food and beverage companies want to diversify, Mondelez is doubling down on chocolate and sweet biscuits & snack bars.

So investors will want to properly assess if these highly addictive products are going to stay as popular as ever or if concerns about health could erode the popularity of the company’s brands. A good guess could come from testing if they would be ready to give up their favorite Mondelez snack.

Constellation Brands, Inc. (STZ +0.19%)

Constellation Brands manages many drink brands, with its most famous being flavored beer Modelo and Corona. The company also owns many wine brands as well as strong spirits.

Modelo is the #2 beer in the US, Corona is #4, and Constellation is the 3rd largest supplier of wine to the US market, as well as the 3rd largest supplier of vodka.

Source: Constellation Brands

The beer business is among the best-performing in the alcohol sector, which has struggled with the growing popularity of legalized cannabis. Beer is still expected to grow 2-4% long-term, and the company managed to preserve its 39-40% operating margins. The company’s ultra-premium wines and spirits are expected to deliver up to 3% net sales growth long term and 22% to 24% operating margins. Most of the revenues come from the US wholesale markets.

Constellation is also looking toward the future, where cannabis consumption will be as mainstream as beer drinking, with a 40% stake in Canadian cannabis company Canopy Growth (CGC +10.19%). With buying in 2019, at the height of cannabis valuation, the deal has turned out poorly from a financial point of view, with Canopy Growth losing most of its market valuation since and a $1B impairment.

Could this market turn around? It could still provide a significant venue for growth for Constellation and a foot in the door of a consumer market promising to become as large as the entire alcohol market in the US. But as Canopy keeps struggling in a tough market, it might prove ultimately to have been a mistake from Constellation.

In any case, Constellation has benefited from the changing demographic trend in the USA:

Our portfolio has the highest level of loyalty among Hispanic consumers relative to those of other major beer suppliers in the U.S. – and our top three brands are also increasing loyalty among non-Hispanic consumers.

Constellation’s strategy is focused on premium brands and capturing the higher-end of both wine and beer markets, commanding higher margins. So, where most drink and beverage companies have a focus on acquiring new brands, Constellation offers its shareholders highly profitable operations and premium brands with deepening market penetration, as well as optionality toward the cannabis market. Like most luxury brands, this makes the company both more valuable and potentially more exposed to economic downturns.

The Kraft Heinz Company (KHC +0.72%)

Another one of Warren Buffett’s large holdings, Kraft, is best known for its ketchup brand and includes many successful consumer brands like Caprisun, Jello, KoolAid, Mac & Cheese, and Philadelphia.

These brands include no less than 8 different brands bringing more than $1B in revenues, with the remarkable statistic that 96% of US households consume at least one Kraft brand.

Source: Kraft

Most of the company business is in North America (77% of revenues). The company sees its largest opportunity in sauces (“taste elevation”) and easy meals like variations of the classic “Mac & Cheese” and other tasty, easy-to-cook meals.

The company is not expecting very significant revenue growth in the developed market but a slight contraction instead (3-4%), partially compensated by a 2.2% growth in emerging markets.

Since 2017, Kraft has struggled with a high level of debt, reducing profitability and capacity for reinvestment. Focusing on “unhealthy” food also made it rather unpopular when meat-free products were all the rage in the markets, something markets have since turned away from. This had led the stock price to decline, leading to the company now having some of the lowest P/E ratios among its peers. This also led the company’s stock to offer a very high dividend yield for the industry.

General Mills, Inc. (GIS +0.23%)

Starting from a flour mill in 1866, General Mills is now a giant food conglomerate managing no less than 46 brands with a focus on breakfast, cereals, and candies, of which the most famous include Cheerios, Cocoa Puffs, Annie’s, and Lucky Charms.

It is present internationally with Haggen-Dasz and locally dominant brands like, for example, Old El Paso, the #1 Mexican food brand in France. The company is also active in the pet food market through its Blue Buffalo brand.

Source: General Mills

In general, the company’s policy is rather shareholder-friendly, with growing dividends and a plan to repurchase 4% of shares in 2025.

In 2024, the company has been focused on increasing brand recognition through advertisements. It has also successfully implemented cost-saving measures with 3-6% cost savings as % of COGS (cost of goods sold) every year and plans to do so again until 2026 at least.

This should ensure stabilization of earnings per share, even with an expected -3% in operating profit for 2025. On a positive note, frozen dough products have seen a rebound after several difficult quarters, and the same trend can be seen for hot snacks like pizza rolls.

Source: General Mills

Overall, General Mills can be an opportunity for contrarian investors, looking to bet that the company can consolidate the recent rebound in sales, raise the profile of its brands, and carve profitable niches in smaller food markets, like cereals, specialty Mexican food, hot snacks, and canned soups.