Beverage analysts don’t see a threat to diet soda makers from the World Health Organization’s recent warning on artificial sweetener aspartame. The United Nations agency labeled Aspartame a potential carcinogen in July . The U.S. Food and Drug Administration pushed back on the designation, however. But giants in the beverage industry that use aspartame, including Coca-Cola and Pepsi , are so far unfazed. Both companies reported better-than-expected quarterly results in July. Pepsi beat on adjusted earnings per share and revenue , and raised its full-year guidance on July 13. Coca-Cola followed suit last week with EPS and revenue that topped estimates , and raised forward guidance as well. Because the WHO didn’t change the consumption limit on aspartame products, the new findings aren’t likely to threaten soft drink makers, according to Citi analyst Filippo Falorni. For example, the WHO’s says an adult weighing around 154 pounds should drink no more than 14 cans of diet soda each day to avoid health concerns. KO PEP YTD mountain Both soda stocks have been little fazed by the World Health Organization’s recent concerns over aspartame. “I think in general, consumers are maybe a little bit more aware, but this doesn’t seem like much of a game changer,” Falorni said. “I was getting a few investor questions when the news came out, [but] then it quieted down very quickly.” Pepsi stock has added 3.8% in 2023, while Coca-Cola has slipped 3.2% — both lagging the 17.1% rally in the S & P 500. “I don’t think we’ve had any calls from any investors on this, because the [consumption limit] is so high,” said Robert Ottenstein, head of the global beverages and household products at Evercore ISI. Meanwhile, Falorni said that the news isn’t likely to hit sales — or soda stock prices — in the near term, and company representatives from both Coke and Pepsi expressed little concern over the WHO warning during quarterly earnings calls. There’s a remote chance the WHO’s designation turns into into a larger issue if the broader public begins to rally against aspartame, but nothing yet indicates consumers are pushing back, the Citi analyst said. “It’s one of those things that are kind of under the surface and something to watch, but for now it’s of no major concern,” Falorni said.
