Coca-Cola's (KO) James Quincey has his work cut out for him as he officially takes over as CEO on Monday.

Among his many tasks, one is to get the soda giant back to performing in line -- or better than -- rival PepsiCo (PEP) . As it stands, the performance gap is pretty wide. 

Coke reported tepid first-quarter results, as its earnings of 43 cents a share slightly missed Wall Street's expectations and its revenue declined 11% to $9.1 billion.

To add insult to injury, PepsiCo's earnings of 94 cents a share beat analyst's estimations for earnings of 92 cents a share, and its revenue rose 2% from the year ago quarter to $12.04 billion.

Shares of Coke have fallen 4% over the past year, while PepsiCo has gained 9.5%. 

A prime reason PepsiCo performed so well in the first quarter was its strong portfolio of snack brands. Frito Lay North America saw its sales climb 4% as people continue to move toward snacking as opposed to eating outright meals.  

Not only does PepsiCo have the food to add to its long list of beverage options, but it's driving the product innovation that makes its food brands strong. In an interview with TheStreet, PepsiCo CFO Hugh Johnston discussed the importance of its "guilt free" snacks -- salty and sweet treats that have lower calorie counts -- including Baked Lays potato chips, its Quaker breakfast options and a new line of lighter chips called Poppables.

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"Frito has established itself as an insurmountable brand," said Michael Musso, managing director of Conway MacKenzie's Consumer Packaged Goods practice. He also spent 13 years at PepsiCo, four of which specifically at Frito Lay.

Musso said even if Coke gears itself up with a few snack brands, it will be difficult for the company to compete with PepsiCo's Frito Lay business, which dominates some 80% of the overall snack food industry.

"Coke needs diversification or it needs to be acquired," Musso said, who thinks the logical buyer would be beer king Anheuser Busch Inbev (BUD) . "If anyone has the resources to compete with [PepsiCo], it's Anheuser Busch."

Coca-Cola CEO James Quincey.
Coca-Cola CEO James Quincey.

PepsiCo's innovation with snacks has helped offset weak sales of soda.
PepsiCo's innovation with snacks has helped offset weak sales of soda.

If Coke decides to stay independent, Musso thinks Coke should target snack giant Mondelez (MDLZ) , the maker of Oreo, Triscuit and Chips Ahoy!, as a possible acquisition that could help it compete with PepsiCo.

"Mondelez has a number of brands that would complement Coke," Musso said.

Sandy Rubinstein, CEO of digital marketing and advertising agency DXagency, said she's a long-time Coke consumer and would like to see more from the company. DXagency provides services to major players in the snack food industry like Welch Foods.

"As a Coke consumer, I want them to give me more," Rubenstein said. Putting acquisitions aside, she said Coke can leverage its own brands like Minutemaid to make snack products, possibly breakfast bars or smoothie mixes.

"Coke and Pepsi are both world renowned, billion dollar brands," Rubenstein said. "The real differentiator is that Pepsi has diversified its portfolio, which is tremendous given the downturn in the sugar industry." The downturn in sales of sugary soda has been severe, and has weighed on Coke's mostly soda driven business. Sales of soda drinks fell by 1.2% in the U.S. in 2016, marking the 12th straight year of declines, according to trade publication Beverage Digest.

Still, Quincey is seen by Wall Street as a leader who can truly transform the Coca-Cola brand. The former COO led Coke's recent transition away from sugary beverages, amid a general consumer shift to healthier food options, and said on the company's recent earnings call that he will be focused on driving growth for brands such as Honest Tea and Powerade.

Jim Cramer and the AAP team hold a position in PepsiCo for their Action Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells PEP? Learn more now.

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