Coke, Pepsi Become the Ultimate Commodities

In addition to the lower cost of their drinks and food products, Coca-Cola, Pepsi and Dr Pepper control distribution networks that are second to none. While it may be difficult to find health-food brands, every convenience store and supermarket in the country will pack their shelves with Coke and Pepsi products, including Pepsi's snack foods such as Frito-Lay, the maker of Doritos.

The proof is in recent filings for Coke and Pepsi. Both boast returns on equity above 25% with dividend yields of about 3%. Coke's shares are up 30% over the past year. While Pepsi's have risen only 4%, they fell less during the stock-market meltdown. As the S&P 500 Index has lost 43% of its value in the past two years, Pepsi dropped 13%.

Coke and Pepsi products aren't luxuries. They are easy to find and afford, and few can resist the sweet, caffeinated fare. Coca-Cola and Pepsi are well-suited to survive and thrive regardless of the economy's condition.

-- Reported by David MacDougall in Boston.

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