Ok so we have found some useful information about coke vs pepsi.These were some of the outcomes we came out with:
Pepsi and Coke the War for Supremacy Continues
Pepsi versus Coke is their a difference? Is one better than the other? They both say absolutely a difference.
The top soft drink competitors in the world spend millions of dollars yearly to try and convince you that their version of soft drink is better. Both are so well known that you only need to see the can or plastic
bottling to know which brand it is. Of course both have the same dark color and any taste test will reveal similar results. So which tastes better and why?
We'll come back to this question later first a little history on the companies and where they are today.
Coca Cola originated as a soda fountain beverage in 1886 and sold for five cents a glass. It was bottled by one of these fountain owners named Joseph A Biedenharm in 1894 and he sent a bottled case to the owner of the company, but that owner took no action towards bottling the product. This came later when two Chattanooga Tennessee lawyers gained exclusive rights to bottle the beverage in 1899. An instant success more than 400 bottling plants were operating by 1909 and then came the famous contour bottle in 1916. In the 1920's bottling overtook fountain sales and by the end of the 1930's Coca Cola was in 44 countries. In the 1950's is when the company expanded into many different sizes of the soft drink and of course today you can buy Coke in any size from a ten ounce on up.
Pepsi got it's start in 1898 when a young pharmacist developed a concoction of water, sugar, vanilla, rare oils and cola nuts into what was called Pepsi Cola. Pepsi became available in six ounce bottles in 1904 the company thrived until the 1920's when after five bad years the company was bankrupt and was sold for 30,000 dollars. The new company made a move when they began selling 12 ounces of soda for five cents which was the price of half that much of their major competitor Coca Cola. The company continued to do well and was the first to introduce a 16 ounce cola in 1963. Today Pepsi can be bought in many different sizes in almost any country in the world. Like Coke they continue to battle for market share and have expanded into many different areas and are now a very diverse company.
Pepsi versus Coke is their a difference? Is one better than the other? They both say absolutely a difference.
The top soft drink competitors in the world spend millions of dollars yearly to try and convince you that their version of soft drink is better. Both are so well known that you only need to see the can or plastic
bottling to know which brand it is. Of course both have the same dark color and any taste test will reveal similar results. So which tastes better and why?
We'll come back to this question later first a little history on the companies and where they are today.
Coca Cola originated as a soda fountain beverage in 1886 and sold for five cents a glass. It was bottled by one of these fountain owners named Joseph A Biedenharm in 1894 and he sent a bottled case to the owner of the company, but that owner took no action towards bottling the product. This came later when two Chattanooga Tennessee lawyers gained exclusive rights to bottle the beverage in 1899. An instant success more than 400 bottling plants were operating by 1909 and then came the famous contour bottle in 1916. In the 1920's bottling overtook fountain sales and by the end of the 1930's Coca Cola was in 44 countries. In the 1950's is when the company expanded into many different sizes of the soft drink and of course today you can buy Coke in any size from a ten ounce on up.
Pepsi got it's start in 1898 when a young pharmacist developed a concoction of water, sugar, vanilla, rare oils and cola nuts into what was called Pepsi Cola. Pepsi became available in six ounce bottles in 1904 the company thrived until the 1920's when after five bad years the company was bankrupt and was sold for 30,000 dollars. The new company made a move when they began selling 12 ounces of soda for five cents which was the price of half that much of their major competitor Coca Cola. The company continued to do well and was the first to introduce a 16 ounce cola in 1963. Today Pepsi can be bought in many different sizes in almost any country in the world. Like Coke they continue to battle for market share and have expanded into many different areas and are now a very diverse company.
Shares of Coca-Cola (KO: Research, Estimates) and PepsiCo (PEP: Research, Estimates) have been on a tear this year, with each posting solid gains in an otherwise dismal market. Coke has surged 20.3 percent year to date while Pepsi is up 7.2 percent. The two currently are trading just a hair off their 52-week highs.
But some analysts and fund managers think the trendier Pepsi has more fizz left in its stock than Coke.
Coca-Cola is launching a new product, Vanilla Coke, next week (May 15) while Pepsi recently announced that it will start selling a berry flavored cola, Pepsi Blue, in August. With Vanilla Coke, the company seems to be banking on nostalgia. (John Travolta's character in "Pulp Fiction" ordered a Vanilla Coke at a 50's themed diner, for example.)
Pepsi Blue, on the other hand, seems to be a concerted attempt to reach out to the hipper, younger demographic that drinks Pepsi's Mountain Dew. And embracing that demographic has worked. The launch of Code Red, a cherry-flavored version of Mountain Dew, last year helped Pepsi increase its market share. According to the Beverage Market Corporation, unit volume for all of Pepsi's soda brands (including Diet Pepsi and Mountain Dew for example) increased 1.3 percent in 2001 while volume for Coke's carbonated beverage brands (Diet Coke, Cherry Coke and Sprite among others) declined by .2 percent.
"This is a mistake for Coke. Pepsi is going after the right market. Younger audiences are going to buy more of Pepsi Blue. I don't see any edge in vanilla," says Ted Parrish, co-manager of the Henssler Equity Fund. As of April 30, Pepsi was the fund's second-largest holding. The fund does not own Coke.
Pepsi is not as pricey
Regardless of which soda you like better though, Pepsi seems the better value than Coke right now. Coke is trading at a nearly 20 percent premium to Pepsi based on 2002 P/Es even though the two companies' earnings growth rates are nearly identical. (Pepsi's are actually a shade higher.)
And when you look at revenues, the gap is even more dramatic. Coke is trading at 7 times estimated 2002 sales while Pepsi is trading at 3.5 times 2002 revenue estimates. Both companies are expected to post slight declines in sales this year and an increase of about 4 percent in 2003. Due to this disparity in valuation, Jeff Kanter, an analyst with Prudential Securities, says he has a "buy' rating on Pepsi and "hold" on Coke. Prudential does not do investment banking.
To be sure, Coke is still the market share leader in soft drinks. One of the main reasons the stock has outperformed Pepsi this year was because it reported a better than expected gain in unit volume in the first quarter. And the company has taken steps to cement its carbonated beverage lead as well gain ground in the bottled water market. (Coke and Pepsi both have their own brands of water, Dasani and Aquafina, respectively.)
On Tuesday, Coke announced that it was acquiring the Seagram's line of mixers, tonic, ginger ale and seltzer from Diageo and Pernod Ricard. And last month, Coke entered into an agreement with Group Danone to distribute Evian bottled water in North America.
Some pretzels with that soda?
But while Coke relies solely on beverages for growth, another factor in Pepsi's favor is its diversity. "What attracts me to Pepsi is I have more faith in their ability to grow earnings. Not only are they successful on the beverage side but they are successful with salty snack foods," says Crit Thomas, director of growth equity for National City Investment Management Co., the subadvisor for Armada Funds. As of March 31, Pepsi was the seventh-largest holding in the Armada Tax Managed Equity Fund and the tenth-largest holding in the Armada Equity Growth Fund.
In fact, Pepsi's carbonated beverages are not even the biggest generator of sales and earnings for the company. Pepsi's Frito-Lay brand of snack foods, which include Fritos, Doritos and Rold Gold, accounted for 61.2 percent of revenue and 65.3 percent of operating profits in the first quarter.
Pepsi's soft drink business made up 19 percent of sales and 23.2 percent of operating profit. Pepsi also owns Gatorade and Quaker Foods, having acquired Quaker Oats last year.
One potential risk for both Pepsi and Coke is the economy. No, not if it goes back into a recession. If the economy continues to improve, the stocks could fall victim to what is known as sector rotation, the selling of defensive companies like food and beverages in order to buy more economically sensitive companies in the financial services and technology sectors. To that end, shares of Pepsi and Coke fell slightly on Wednesday during the Cisco-induced market rally.
Still, Thomas says signs that the dollar is starting to weaken compared to other currencies should prop up both stocks. That's because a weaker dollar helps boost the profits of international subsidiaries, since profits made in a foreign currency are converted back to dollars. The majority of Coke's sales are from its international operations, with just 38 percent of revenue coming from the U.S. last year. Pepsi is not as big globally but currency fluctuations are still a factor, as international sales accounted for 29 percent of revenue in 2001.
More than just two soda stocks
But if you're not a fan of either Pepsi or Coke, there actually are several other beverage stocks out there. And they're trading at lower valuations. Cadbury Schweppes (CSG: Research, Estimates), the British confectioner, owns the Dr Pepper, 7 Up, A&W and Royal Crown brands of soda. It too is joining the new round of cola wars, introducing Red Fusion, a fruit flavored version of Dr Pepper, Friday. Red Fusion will hit the market in July. Cadbury Schweppes' stock trades at a sizable discount to Coke and Pepsi, with a P/E of 16.7 based on 2002 earnings estimates. Earnings are expected to increase 12.5 percent this year.
Cott (COTT: Research, Estimates), the largest maker of private label sodas, trades at 26 times 2002 earnings estimates but it's growth prospects for this year and next are better than Coke and Pepsi. Analysts expect Cott's earnings to increase 34.5 percent this year and 23 percent in 2003.
Finally, for you Shasta fans out there (we know there are some), there is National Beverage (FIZ: Research, Estimates), which owns Shasta and Faygo, a brand of carbonated beverages popular in the Midwest. The stock is thinly traded and has no analyst coverage, but for what it's worth it is trading at less than one times last year's sales. 
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