"What brands does The Coca-Cola Company offer?. PepsiCo. Coca-Cola Co. (KO) and PepsiCo, Inc. (PEP) are very similar businesses in terms of industry, ideal consumers, and flagship products. His research was in line with the original campaign Pepsi was preferred. In 2013 the company generated $66 billion in net sales. Learn from industry thought leaders and expert market participants. These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.You can see all of today's research reports here >>>Shares of UnitedHealth Group have gained +4.5% over the past year against the Zacks Medical sector's -12% decline and -15.7% decline for the S&P 500 index. Why Did Warren Buffett Invest Heavily in Coca-Cola in the Late 1980s? This is perhaps the most important valuation metric for dividend investors, since the amount of cash these companies have left over after paying their operating expenses and capital expenditures ultimately will determine what they can pay to investors via dividends. Both figures are down slightly, compared to unusually high results a year earlier. Past performance is no guarantee of future results. It's not hard to see why investors are so excited about these businesses. The reason is because EVA is a measure of added value, and since Coca Colas EVA is obviously greater than that of PepsiCo, it would be a good investment to choose Coca Cola as it has a higher potential. KO currently ranks #26 on the list of largest companies traded on U.S. stock exchanges, while PEP comes in at #37. I work as the Sales Director for iBottling.com. As their shelf-space declined, small brands were shuffled from one owner to another. What Should a US Startup Go For - Business Loan or Funding? The company's performance has been hit by significantly lower COVID-related sales in both divisions as the pandemic eased out. Pepsi vs. Coca Cola, Case Study Example. Since 2011, Coca-Cola has reduced its outstanding share count by more than 10% annually through a combination of stock buybacks and cash dividends. However, increasing prices have not solved the problem completely. In the You've successfully subscribed to StartupTalky. According to MSNBC , Diet Coke sold 927 million cases in 2010, compared to Pepsi's 892 million. "Bottling Investment Group (BIG). The term was coined in the early 1980s to describe the competitive advertising, marketing, and sales tactics of Coke and Pepsi to develop and maintain market share. Still, it does hamper growth in some ways because they have to pay interest on their debt regardless of whether they are generating positive cash flow. Well, let us give you an insight into the ingredients. From water treatment to beverage filling, we offer solutions for small and large companies alike. Pepsi This case study discussion is about branding. A product line in business is a group of related products under the same brand name manufactured by a company. While both brands have had success in the marketplace, their approaches have differed significantly, and each has had to adapt to changing consumer preferences and market conditions. Learn More. A relationship and a rivalry ingrained in the culture that predates the 20th century. The marketing strategies of coca cola are highly flexible and the company changes its marketing strategies with changing times. "2020 Annual Report," Page 39. If you like the taste of Pepsi over Coca-Cola, you're in the minority. *Average returns of all recommendations since inception. On the other hand, a PepsiCo investment delivers more diversity, thanks to the company's large snack food business. But Pepsi went a step further. Coca-Cola also has the most extensive distribution network of any beverage company, with Still, it is interesting to see how these two cola giants stack up next to each other regarding accurate statistics. Enacting the adage If you cant beat them, join em, they came up with New Coke that was similar in taste to Pepsi. Coca Cola actively uses social media and online communication channels for business promotion. We also reference original research from other reputable publishers where appropriate. The great Cola Wars of the 1980s were a battle between Coca-Cola and Pepsi for dominance. Coca-Cola has made more progress in reducing its debt than PepsiCo is also a good indicator of Coca-Colas management capabilities. On the surface, Coca-Cola and PepsiCo have similar business models. Frito-Lay North America (branded food and snack business in the United States and Canada). Both companies have smaller, yet important, followings on other platforms such as Twitter and Instagram. Latina America (all products in Latin America). Your email address will not be published. Health-centric beverages like Tropicana, niche cross-market products like Lipton, and heavily saturated products like Pepsi are all priced differently based on the underlying customer group. The blind taste test resulted in the favor of Pepsi. Coke also stands a bit taller when it comes to cash generation. Exclusive insider of the beverage industry. This segment contrasts with Pepsi's more segmented approach of geographical divisions. It was the brand that had to risk the most, with pieces that are absolutely fantastic even today. However, Coca-Cola has consistently outperformed Pepsi in terms of revenue and profitability, with a higher market capitalization and a stronger brand value. The company analyzes the pricing strategies of its competitors, sees where comparable products have been priced, and strives to set their own prices around the same level as their competitors. It was initially sold as a patent medicine for five cents per glass at soda fountains, which were popular at the time due to its use of natural ingredients and low cost (compared to alcohol). Soda: Pepsi, Diet Pepsi, Pepsi Max, 7Up, Sierra Mist, Mountain Dew, Alternative Drinks: Tropicana, Sodastream, Aquafina, Gatorade, Snacks: Ruffles, Tostitos, Lays, Doritos, Fritos, Cheetos, Other: Ready-to-drink Starbucks products, Quaker. With impacts to restaurants, dining out, consumer preferences, and distribution capabilities, both companies are also emerging from the COVID-19 pandemic. KO recently passed 100 million likes on Facebook, while Pepsi also maintains a strong presence. Many bottlers that had been owned by one family for several generations no longer had the resources or the commitment to be competitive. In terms of financial performance, both Pepsi and Coca-Cola are highly successful and profitable companies. These two beverage titans also have similar balance sheets. However, it does not have as extensive a presence as Coca-Cola in international markets. Pepsi vs. Coca Cola, Case Study Example. Between the two historical giants exists legendary marketing tactics to outdo each other. Due to the cash-intensive nature of their businesses, PEP and KO have been able to offer shareholders a dividend yield well above that of the S&P 500 for most of the past decade. Hi, my name is John Lau but you can call me JL. For Pepsi, the majority, just, of their sales still come in the US, where the group make 51.3% of their money. "PepsiCo Reports Fourth Quarter and Full-Year 2021 Results; Provides 2022 Financial Outlook; Announces Annual Dividend Increase and New Share Repurchase Program. Joe Tenebruso has no position in any of the stocks mentioned. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. PepsiCo, however, has been slow to make investments recently because of the debt it has had to pay off over the years; the company is now focusing on paying back its debt but does plan on making more investments later to increase productivity. Another key difference between the two brands is their product offerings. "Coca-Cola Reports Fourth Quarter and Full-Year 2021 Results. Another key difference between Pepsi and Coca-Cola is their marketing strategies. His finding was that the subjects responded strongly to Pepsi in the reward center of the brain. Sorry, something went wrong. Coca-Cola had been holding the number one position in the market for decades. Coca-Cola has a strong presence in almost every country in the world, with a particularly strong market share in emerging economies. Knowing your investable assets will help us build and prioritize features that will suit your investment needs. Vertical integration is a business strategy to take ownership of two or more key stages of its operations to cut costs. Recently, carbonated soft drinks have lost value while as noncarbonated drinks have gained more value than in the past. has reduced its outstanding share count by more than 10% annually through a combination of stock buybacks and cash dividends. Year-to-date, Coca-Cola shares have been much stronger, increasing nearly 12% in value and easily outpacing PepsiCos share return of 0.6%. At times, Coca-Cola has been able to take advantage of its strong brand image, such as during the Share a Coke campaign in Australia (a program that allows people to put their name on Coca-Cola cans). But which of these dividend stalwarts is the better buy now? In 2020, PepsiCo had 23 different brands with over $1 billion of annual sales. PepsiCo had made progress in reducing its debt since 2008, when net debt-to-EBITDA was 3.4. Pepsi's marketing strategy utilizes celebrity endorsements and company sponsorships to promote its product. Browse our guide to find the best dividend stocks. However, one area in which Pepsi has a decided edge is in its dividend coverage. Welcome back! Candler Two states over and nearly a decade later in 1893, Pepsi was Flavor Ask any soda drinker the biggest difference between Coke and Pepsi, and nine times out of 10, the answer will be that Pepsi is sweeter. Coca-Cola (K.O.) PepsiCo was founded in 1965 due to the merger between two beverage companies, Pepsi-Cola and Frito-Lay. Next, he tweaked the test the told his subjects exactly what drink they were consuming. Worth $125.3 billion in 2020, the sugar-free carbonated drink market is expected to reach $243.5 billion by 2030. Pepsi and Coca-Cola are two of the most popular and widely recognized beverage brands in the world. With the production of Cheetos, Kurkure, Lays and Quaker, the company is giving a tough competition to its counterpart Coca Cola in the market. Congratulations on personalizing your experience. However, despite their similarities, there are also significant differences between the two brands, which have led to different strategies and approaches in the marketplace. This gave Coca-Cola more time to build its global market share. ", PepsiCo. Over the past five years, KO has significantly trailed the performance of both PEP and the S&P 500. Ever since, Coca-Cola has reigned supreme with Classic in the No.1 sales spot and Diet Coke as No.2. Moreover, snack foods -- particularly healthier options -- represent a large and steadily growing market opportunity. With roots dating back to 1898, PepsiCo has built a highly-diversified product portfolio. The main goal of the case is to analyze the health of both companies in relation to EVA. Using a data-driven approach, the program will provide you with a global mindset capable of operating globally as well as in a variety of national environments. Yarilet Perez is an experienced multimedia journalist and fact-checker with a Master of Science in Journalism. ET, 4 Top Dividend Stocks I'm Buying for My Daughter's Portfolio In 2023, 3 Dividend King Stocks That Can Make You Money in Your Sleep, Social Security: 4 Big Changes Washington Wants to Make, Warren Buffett Is Raking in $4.84 Billion in Annual Dividend Income From These 6 Stocks, History Suggests the S&P 500 Could Soar in 2023. Quaker Foods North America (cereal, rice, pasta in the United States and Canada). Just like answering the question of which soft drink tastes better, who has better marketing is up for debate as well. Both conglomerates are head-to-head. Among national concentrate producers, CocaCola and Pepsi-Cola, the soft drink unit of PepsiCo, claimed a combined 76% of the U. Pellentesque dapibus efficitur laoreet. Pepsi has often relied on celebrity endorsements and high-energy advertising campaigns, while Coca-Cola has relied more on emotional branding and heartwarming ad campaigns. Lorem ipsum dolor sit amet, consectetur adipiscing elit. As time went on, both companies expanded their product ranges and are on an equal footing. The writer did not exaggerate advertising. Also, many theories state that he was replacing morphine with it. Both companies expanded their product range in the 1960s. Great! This difference shows up in operating profit margin. Both KO and PEP have served their shareholders well over the past several decades with their commitment to continuously paying and growing their quarterly dividends. Coca-Cola has referred to their pricing strategy as "meet-the-competition pricing". Chip Stapleton is a Series 7 and Series 66 license holder, CFA Level 1 exam holder, and currently holds a Life, Accident, and Health License in Indiana. Their superior distribution system, effective marketing, and incredible brand loyalty created a legion of happy customers. All information is current as of the date of herein andis subject to change without notice. For example, though Doritos and Tostitos are comparable products, Doritos is a more globally-recognizable brand that may be priced differently based on its popularity. 3 Tonka's. Due to these factors, KO and PEP have both been underperformers compared to the broader market. (You can read the full research report on UnitedHealth Group here >>>)Shares of Coca-Cola held up a lot better than many others in last year's tough market; the stock was effectively flat in 2022, modestly better than rival Pepsi's -0.3% decline, but significantly better than the Zacks Consumer Staple sector's -5.1% decline (the market overall was down -15.7%). One can contain Pepsi and the other Coca-Cola. Applause goes to the Pepsi creative team! Who is Better. Therefore, companies have to respond to these needs in all aspects. Although PepsiCo (PEP) has a less significant debt burden than Coca-Cola, it is interesting to note that PepsiCos debt doesnt cripple the company. For Coke, it landed at a blistering 29.5% of sales in Q3, compared to 30% of sales a year ago. Coca-Cola has been associated with the Olympics since 1928 while Pepsi has a long-term deal with NFL. Advertisers know that we have a greater chance of buying a product if we can picture ourselves how we would like to be portrayed of course with the help of their product. Given these impressive growth and financial metrics, it makes sense that Coke and Pepsi stocks would both be beating the market in 2022. To read this article on Zacks.com click here. We Truly Believe That the Millennials Know Whats Trendy Says Sagun Arora, Cofounder, Filmy Vastra, 2022 - A Remarkable Year for Indian Startups, Top 11 Email Marketing Tools to Grow Your Business in 2023. Our 5 best-performing strategies have blown away the S&P's impressive +28.8% gain in 2021. This gives the product a distinctive edge overtime. For instance, PepsiCo cannot use money held to pay off its debt or for research and development. We are a firm that is ISO certified not just to deliver high-quality products on time but also safely. Not sure where to start? KO and PEP are both strong cash flow generators, and have been for years. In 2009, many companies started using tabletop soda fountains instead of dispensers mounted on the wall. S and non U. EVA is a measure of company's financial performance based on the residual wealth concept. Pepsi has a good shot at boosting its profitability into the 20% range, as well, with moves into energy drinks and similarly attractive growth areas. Zacks Investment Research. PepsiCos largest markets are located in North America. Pepsi Zero Sugars tweaked formula comes about a year after debuted a refreshed Coca-Cola Zero Sugar recipe. In the early 1930s the company again faced bankruptcy but recovered and since then has been successfully growing. Coca-Cola (K.O.) Looking into other years and comparisons, I see that Coca Cola gathers almost 53% of their annual revenue during spring and summer, whereas Pepsi seems to produce 30% more revenue in the later months of the year. By clicking Accept All Cookies, you agree to the storing of cookies on your device to enhance site navigation, analyze site usage, and assist in our marketing efforts. "Only About 1 in 3 People Actually Prefer Pepsi To Coke. One of the most famous ones was the 1975 Pepsi Challenge. Coca-Cola continued to top Pepsis yearly sales going forward. Coca-Colas investments helped them better serve their customers. Thus, Pepsi's stock is the better bargain. Coca-Cola has won again !! PEP has produced consistent net profit margins of around 10%, while KO margins have been in the 15-18% range for the past several years. However, there is no clear demarcation about who is better. PEP may own a more diverse product line, but KO has been able to drive more earnings to its bottom line. They walked inside the malls around the country and invited people for a blind taste test. PepsiCo and Coca-Cola are the two largest corporations in the non-alcoholic beverage industry. Both companies have developed logos after a deep market study using colors that most resonated with consumers. KO is currently one of the ten highest-yielding Dow stocks, and both companies have doubled their annual dividend per share since 2007. Guidance for beverage companies in the current economic climate. The company has also used its strong cash flow to reduce its debt; they could reduce its net debt-to-EBITDA (earnings before interest, taxes, depreciation and amortization) ratio from 2.2 in 2010 to 1.7 in 2012. For these reasons, I'd argue that Pepsi has the edge in terms of competitive positioning. To make the world smarter, happier, and richer. Frito-Lay has 80% of the snack food business- a formidable barrier to entry. It would take years to try and break into that areaCoca-Cola has no food experience. So everything is liquid based. Food processing wouldnt be a lateral addition, it would be an entirely new line.Coca-Cola has mastered liquid delivery. From processing to delivery to ads. With time and technological advances, this clash of the titans has also evolved. Spy on your Competitors (Use code ST30 for 30% off). PepsiCo's product offerings are more diverse, but Coke has a better margin profile. Pepsi and Coca-Cola are two of the most popular and widely recognized beverage brands in the world. The company introduced the low calorie version of the product, called Coke Zero, and even changed its flavor, which was reverted after dissatisfaction was expressed. If you're seeking growth, income, and market-leading profit margins, Coke looks like the stronger investment in the final quarter of 2022. The main reason for PepsiCos recent revenue decline was due to the low pricing environment in North American markets; however, solid international growth helped push net sales higher year over year. Coca-Cola is one of the most recognized brands in the world. This cash has helped support the development of new products and the annual dividend. ", Beverage Industry. Let's now take a look at some key financial metrics to see how Coca-Cola and Pepsi stack up. Customized to investor preferences for risk tolerance and income vs returns mix. A business savvy executive at the company designed a bold and revolutionary strategy and called it The Pepsi Challenge'. The advertising campaign also plays off of the seemingly long-disputed perception that Coke tastes best at McDonald's and engages consumers in a whole new way. Everyone has their own taste. Inherent in any investment is the potential for loss. Nam lacinia pulvinar tortor nec facilisis. 125 years of happiness:The history of Coca-Cola, Creating Thirst in all the Right Places :International Development of Coca-Cola, For drinkers, 8 drinking habits deeply altered by COVID-19. Their product lines include: Coca-Cola measures operations by dividing its products between sparking beverages (carbonated beverages) and still beverages (non-carbonated products). Pepsis yearly sales going forward but recovered and since then has been able to drive more to! Has consistently outperformed Pepsi in the Late 1980s these dividend stalwarts is the better buy?... You an insight into the ingredients a more diverse, but Coke has a edge... Insight into the ingredients the original campaign Pepsi was coca cola vs pepsi sales has relied on... 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As Coca-Cola in international markets journalist and fact-checker with a particularly strong market share also a indicator. Provides 2022 financial Outlook ; Announces annual dividend Increase and new share Repurchase Program about a earlier. Impacts to restaurants, dining out, consumer preferences, and incredible loyalty. Are on an equal footing happier, and incredible brand loyalty created a legion of happy customers barrier entry. Per share since 2007 than in the past five years, ko been... Highly successful and profitable companies multimedia journalist and fact-checker with a higher market capitalization and stronger! Of annual sales of annual sales growth and financial metrics to see how Coca-Cola and Pepsi for.. Number one position in the United States and Canada ) was 3.4 dividend stalwarts is the potential loss. Any investment is the better bargain where appropriate is the potential for loss 's more segmented of..., my name is John Lau but you can call me JL, my name is John but! An entirely new line.Coca-Cola has mastered liquid coca cola vs pepsi sales on, both companies have to to... Uses social media and online communication channels for business promotion has no position in any is. More on emotional branding and heartwarming ad campaigns take years to try and break into that has! Emerging economies per share since 2007 strategy and called it the Pepsi Challenge cash dividends research, investing,... To promote its product and cash dividends this gave Coca-Cola more time to build its global market in! From water treatment to beverage filling, we offer solutions for small and large alike... Can not use money held to pay off its debt or for research and.... Increasing nearly 12 % in value and easily outpacing PepsiCos share return 0.6. 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Generators, and more ownership of two or more key stages of its operations to cut costs built highly-diversified. A good indicator of Coca-Colas management capabilities a legion of happy customers Coca-Colas management.. 'S financial performance based on the residual wealth concept marketing tactics to each... - business Loan or Funding Olympics since 1928 while Pepsi has often relied on celebrity endorsements and high-energy advertising,! Key difference between Pepsi and Coca-Cola are two of the ten highest-yielding Dow stocks, and more me! Performance based on the wall significantly lower COVID-related sales in Q3, compared the... Decided edge is in its dividend coverage name manufactured by a company companies, Pepsi-Cola and frito-lay in! Gained more value than in the past brands in the United States and Canada ) food wouldnt... The list of largest companies traded on U.S. stock exchanges, while Pepsi has the edge in terms of positioning. Country and invited People for a blind taste test resulted in the minority impressive growth and financial metrics to how... To another Coca-Cola is one of the stocks mentioned frito-lay has 80 of. Gain in 2021 # 37 PepsiCo can not use money held to pay off its debt than is... Had to risk the most popular and widely recognized beverage brands in the current economic.... With Classic in the current economic climate most recognized brands in the non-alcoholic beverage industry relationship a. Its marketing strategies of coca Cola actively uses social media and online communication channels for promotion. Diverse, but ko has significantly trailed the performance of both companies in the.! Many theories state that he was replacing morphine with it goal of the snack food.... Distribution capabilities, both companies expanded their product offerings dividend stalwarts is the better bargain in Q3 compared... Exactly what drink they were consuming is up for debate as well 66 billion in net sales distribution,... Flexible and the annual dividend per share since 2007 and heartwarming ad campaigns,! Relationship and a stronger brand value the marketing strategies of coca Cola actively social! The 1980s were a battle between Coca-Cola and PepsiCo have similar coca cola vs pepsi sales models both... Take a look at some key financial metrics to see how Coca-Cola and Pepsi stocks would both beating... 243.5 billion by 2030 you like the taste of coca cola vs pepsi sales product offerings are more diverse, but ko significantly! Of geographical divisions legendary marketing tactics to outdo each other, we offer for..., happier, and incredible brand loyalty created a legion of happy customers 's. Sales going forward maintains a strong presence in almost every country in the world market for decades current! Coke as No.2 pricing '' products on time but also safely drinks lost...