Keurig Dr Pepper (KDP  ) has now outpaced Pepsi by PepsiCo. Inc. (PEP  ) to claim the title of America's second-favorite soda. This development marks a notable change in consumer preferences and industry dynamics.

What Happened: The market share data from Beverage Digest revealed this change for the year 2023, CNN reported on Monday.

While Coca-Cola (KO  ) continues to lead the market by a substantial margin, Dr Pepper edged out Pepsi by a narrow margin. Both had a market share of 8.3%, but Dr Pepper was slightly ahead. Following them were other Coca-Cola-owned brands, with Sprite at 8.1% and Diet Coke at 7.8%.

According to Duane Stanford, editor of Beverage Digest, Dr Pepper's rise can be attributed to its steady popularity growth, while Pepsi has seen a decline. The two brands have now met in the middle of the rankings.

Dr Pepper, with its unique blend of 23 flavors, has been capitalizing on the "swicy" trend, combining sweet and spicy, which is currently sweeping the food and beverage industry.

Meanwhile, PepsiCo's focus might have been diverted to its expansive food business and zero-sugar beverage lines, potentially causing the classic Pepsi to lose ground in the soda market.

Why It Matters: Keurig Dr Pepper's recent success in the soda market is mirrored in its financial performance. The company reported a first-quarter FY24 sales growth of 3.5% year-on-year to $3.47 billion, surpassing analyst expectations. Notably, U.S. Refreshment Beverages, which includes Dr Pepper, rose 4.3% to $2.1 billion.

This growth comes amid a challenging period for PepsiCo, which was gearing up to report its first-quarter financial results with analysts cautioning on the performance of its salty snacks division. PepsiCo faced a critical earnings report that could reflect the shifting focus from its core soda products to other business areas.

Price Action: On Tuesday, at the time of writing, Keurig Dr Pepper was trading 0.32% higher at $34.48 after closing at $34.37 while PepsiCo was trading 0.33% higher at $171.80 after closing at $171.23, according to Benzinga Pro.