Summary
- Coca-Cola has been losing revenue streams as sweet beverage demand remains under historical levels with health conscience spending on the rise.
- PepsiCo has seen a year of declining revenues but it has kept its product portfolio diversified and is experiencing healthy growth.
- Looking at the breakdowns of both companies show a clear favorite until the beverage market in the US and around the world shows definitive signs of a turnaround.
- Those willing to take the risk and pay an annual dividend can consider a pair trade with shorting Coca-Cola and going long PepsiCo.
Coca-Cola Company (KO) and PepsiCo (PEP) are the largest beverage manufacturers in the United States and the world, along with Anheuser-Busch InBev (BUD). However, PepsiCo's diversified business and rather consistent revenue streams have enabled it to outperform nearly 2:1 when it comes to share performance, rising 45% in the last 5 years compared to Coca-Cola's 24% return over the same time period.
Overall, I expect this trend to continue as some of the beverage market rebounds in the United State and globally alongside Coca-Cola's diversification efforts. It's hard to see a scenario in which this trend reverses any time soon.
