Coca-Cola has fountain-beverage accounts with McDonald's (MCD), Burger King (BKW) and Subway. Pepsi has Yum Brands (YUM) restaurants, which include Taco Bell, Pizza Hut and KFC. (Of course, Yum Brands resulted from a Pepsi spinoff.) In fact, Pepsi was the drink provider in Subway restaurants before it was replaced in 2005 by Coca-Cola. At that time, Coca-Cola had a 68% market share of the domestic fountain-beverage market.
Pepsi continues to be a great investment opportunity. There are calls for the company to split its beverage and snack food business, but Pepsi continues to fight against such a move. At the start of the year, I chose Pepsi as one of my top 10 stock picks for 2014. With additional entries into restaurants through its beverage and food offerings, Pepsi may be best served by keeping its units together.
At the time of publication, the author held no positions in any of the stocks mentioned.