Best in Class: Pepsi's Plan for Global Domination

NEW YORK (TheStreet) -- Last August, PepsiCo(PEP) announced what would become one of the most highly discussed deals in the business world: the $7.8 billion acquisition of its two largest bottlers -- Pepsi Bottling Group and PepsiAmericas.

Completed in March, the deal has been hailed as one of Pepsi's shrewdest business moves. "With consumers in North America migrating from soda to healthier beverages, we think that owning its bottlers should allow Pepsi to be nimble in its route to market and give it the ability to react quickly to shifting consumer tastes," Morningstar analyst Philip Gorham recently said in an equity research report.

As predicted by many, it wasn't long before its arch rival Coca-Cola(KO) announced a bottling acquisition of its own: that of Coca-Cola Enterprises'(CCE) North American bottling operations in February 2010. The announcements by two of the most dominant forces in the beverage industry set off what many loved to call "the soda wars."

But PepsiCo's new CFO and 23-year company veteran Hugh Johnston said that while he understands why it can be fun to pit two of the most successful beverage companies in the world against each other, a direct comparison between Pepsi and Coke isn't really that useful, given that Pepsi's scope stretches far beyond beverages.

"When it comes to the everyday lineup of beverage portfolios -- sure -- it's good fun and I think consumers find it interesting. And if they find it interesting, we find it interesting," Johnston told TheStreet when he was in New York City last month for a UN business leaders conference. "But if you really think about where we are as a company -- half of our business is in snacks and foods -- outside of the beverage space. So we really are, I think, far more diverse than Coke is."

Indeed, Goldman Sachs recently reiterated its conviction buy rating for PepsiCo, believing that the market has been undervaluing the company's Frito-Lay business despite its better growth and profitability outlook when compared with the other packaged food companies in Goldman's coverage universe.

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