Sodastream International Ltd (NASDAQ:SODA) has lured some users at the margin, but it has yet to grab a hold of big restaurant chains or vending distribution, which are vital methods for staying in the customers’ mind. Plus, the company lacks the brand power inherent in the centuries-old brands of Coke and Pepsi.
For now, The Coca-Cola Company (NYSE:KO) and PepsiCo, Inc. (NYSE:PEP) are safe. Consumers want convenience and health, not just health or not just convenience. Furthermore, the two brands have ample pricing power, which can be seen by the fact that soda prices are rising much faster than soda consumption is declining.
Whether the future drink is soda or some new crazy water cocktail, world citizens will still need 64 ounces of fluids each day. Luckily for The Coca-Cola Company (NYSE:KO) and Pepsi, the distribution systems around the world are set up to sell their stuff.
At 17 times forward earnings, investors are not overpaying for a quality, leading company like Coca-Cola. But, if snacks, not just sodas, are more your fancy, you may favor PepsiCo, Inc. (NYSE:PEP)’s diversified model, which investors let go for a discount at 16 times forward earnings expectations.
New products will help keep these brands on the top of their game, but their distribution power cements them at the top, no matter what people drink.
The article Can This New Soda End a Sugar Slump? originally appeared on Fool.com and is written by Jordan Wathen.
Jordan Wathen has no position in any stocks mentioned. The Motley Fool recommends The Coca-Cola Company (NYSE:KO), PepsiCo, Inc. (NYSE:PEP), and SodaStream. The Motley Fool owns shares of PepsiCo and Sodastream International Ltd (NASDAQ:SODA). Jordan is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.