This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

For Pepsi and Coke, Taste Test Is Over -- Here's Why

NEW YORK (TheStreet) -- With year-to-date gains of 12.35%, PepsiCo (PEP - Get Report) shareholders are toasting the good life -- at least they should be.

Pepsi stock closed Friday at $91.85, up 0.07%.

Read More: 10 Stocks Carl Icahn Loves in 2014

On the other side of the isle is rival Coca-Cola (KO - Get Report), whose shares have gained just 0.49% in 2014. And when looking back at their respective three-year and five-year charts, Pepsi has outperformed Coke by more than 6% in aggregate.

New investors continue to pile into Pepsi while Coke remains flat. The taste test results are in. And at this point, the debate as to which company is better has already been decided.

Coke has run out of innovative ideas. The company has, instead, taken a venture-capital tack to help offset weak sales. And its recent purchase of a 17% stake in Monster Beverage (MNST) is the latest example of how management is scrambling to quench Wall Street's thirst for growth. The way I see it, Coke cares only about dominating the beverage industry.

Pepsi, meanwhile, which has a strong-performing beverage business of its own, has fully embraced snack foods. The company's motto says, "Bet you can't eat just one" -- referring to its Frito-Lay potato chips.

It's the snack business that's become the key to differentiating Pepsi from Coke.

Restaurants like Buffalo Wild Wings (BWLD), a fast-growing restaurant chain, are ditching Coke products in favor of Pepsi. Buffalo Wild Wings gets a majority of its business during the height of sports seasons or events. With Pepsi owning sponsorship rights to the NFL and Major League Baseball, this is a perfect match for a sports-focused environment like Buffalo Wild Wings.

Then there's also Taco Bell, the fast-food restaurant operated by Yum! Brands (YUM). Pepsi's "outside the bun" thinking spawned the popular innovation of Doritos Locos Tacos. This has become one of the fastest-growing new product introductions in the history of fast food. At the time, Greg Creed, CEO of Taco Bell, said this was "the biggest launch in Taco Bell history."

Read More: Tesla's Model X: Everything We Know

Since introducing the new tacos in March 2013, Taco Bell has sold more than $1 billion worth of Doritos Locos Tacos. Taco Bell's success was not lost on Buffalo Wild Wings.

Although Coke currently owns roughly 70% of the U.S. fountain beverage business, Pepsi's innovative qualities should spur more market share gains in the coming years.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
KO $40.35 -0.25%
PEP $95.63 0.39%
AAPL $124.24 0.70%
FB $83.01 0.11%
GOOG $555.17 -0.65%


DOW 17,678.23 -40.31 -0.23%
S&P 500 2,056.15 -4.90 -0.24%
NASDAQ 4,863.3620 -13.1570 -0.27%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs