The Coca-Cola Company (KO), PepsiCo, Inc. (PEP): Will a Weak Quarter Deter Investors?

Further, PepsiCo, Inc. (NYSE:PEP)’s real advantage is that it is equally as big a snack company deriving half of its revenue being the world’s leading snack-food maker. Its dominance can be understood from the fact that it owns approximately 38% of U.S. salty snack retail sales, while, competitors Kraft Foods and Kellogg hold about 9% and 5%, respectively, of the U.S. snack market.

Dr Pepper Snapple Group Inc. (NYSE:DPS) has a very concentrated portfolio like Coca-Cola, as practically all of its revenue is attributed from sale of sweetened beverages. Dr Pepper Snapple Group Inc. (NYSE:DPS) is also introducing its “TEN” low-calorie drinks, such as 7UP TEN, A&W TEN, Sunkist TEN, RC TEN, and Canada Dry TEN to attract health-conscious customers, but it is yet to make a mark.

Moreover, the company’s ownership of Snapple (tea and juice) has also not been able to offset any decline in soda revenue, like Coca-Cola’s still beverage segments performance has been a relief for its falling sale of sparkling drinks. Further, the company’s Snapple sales have in fact declined 2%, which the company’s management has blamed on cold weather. With time, the company has improved its revenue and profits but its concentrated product portfolio with not much exposure in emerging markets definitely remains a cause of concern.

The Coca-Cola Company (NYSE:KO) has a history of combating all odds and coming out as a winner in the past which I believe is what we can expect from the industry bellwether in the future too. The company’s attempt to grow its business from still beverages and introducing more diet versions is a big step in the direction to keep its customers attracted. Further, the company has always returned cash generously to its investors, and in the last reported quarter, too, it paid dividends and purchased shares worth $4 billion.

PepsiCo, Inc. (NYSE:PEP) on the other hand has a huge upper hand of having a concentrated portfolio towards growing its snack business without any major competition in the domestic market. It is also trying hard to maintain its revenue from the beverage business and is investing heavily in it to dominate the emerging markets. Both the companies have their own advantages and a great brand image to back their products and please their investors.