USA TODAY: Investor confidence in PepsiCo finally put the No. 2 beverage maker’s market capitalization ahead of Coca-Cola for the first time Monday.
Pepsi closed up 31 cents at $59.31 to give it a market capitalization of $98.4 billion. Coke closed down 36 cents to $41.15 for a market capitalization of $97.9 billion. The shift reflects Wall Street’s ongoing taste for Pepsi’s diversified portfolio of beverage and snack brands compared with Coke’s focus on soft drinks.
Coke’s stock appeal has waned vs. Pepsi’s for nearly five years. And as late as the 1980s, Pepsi was a shadow of its larger rival. “Coke at one point had three times the market cap of Pepsi,” says Caroline Levy, UBS beverage analyst. “It was the global consumer company. It doesn’t have a lock on international anymore. Coke has suffered from its global exposure because it’s heavily reliant on slow-growth countries such as Japan and Western Europe.”
While Coke was busy building its global soft-drink empire, Pepsi grew its business through acquisitions — of non-carbonated soft drinks such as Tropicana and Gatorade and of snack makers by its Frito-Lay unit.
Today, Pepsi generates about 23% of its worldwide profit from carbonated soft drinks while Coke generates about 85% of its profit from carbonated soft drinks such as Coca-Cola and Diet Coke, Levy says. “Pepsi recognized much earlier than Coke that carbonated soft-drink trends were at risk and that they needed to pursue non-carbs as well as snacks.”
