The ultimate battle of two major players competing for the topspot in a massive global market.The cola and carbonated beverage industry reaches to virtuallyall corners of the planet, and the vast majority of the market sharebelongs to the two giants Coke and Pepsi.With such a huge market and enormous revenue potential in anindustry such as this, it is no wonder that the Coke vs. Pepsicompetition is so fierce.
OriginCoke and Pepsi were both created before 1900.Coke was invented in Atlanta by pharmacist JohnPemberton in 1886.Pepsi also was created by a pharmacist--CalebBradham from New Bern, North Carolina, in 1898.
The formulaCoca-Cola Original Formula: Coca-Cola contained coca leaves and kola nuts, known to promoteenergy.Coca leaves, from which cocaine derives, was a primary ingredient, butwere fully removed from the formula by 1929.Pepsi-Cola Formula:The premise of the original formula is the ingredients emulated Pepsin,and digestion aid.It did not contain kola nut.
Coke vs Pepsi blind taste tests have also proven unsuccessfulin determining a clear cut winner.Both companies have used them, as well as independents.The results are typically very even, with about half the votesgoing to both Pepsi and Coke.What is interesting to note is that in a Coke vs Pepsi blind tastetests the voting results are almost always 50/50 split.
Coke PepsiSelena Cuba Gooding Jr.Jerry Mathers and Ken Osmond Tina TurnerDavid Liesure Ray CharlesRay Parker, Jr. Spice GirlsTelly Savalas Britney Spears“Wierd Al” Yankovic Jennifer Lopez and Beyonce KnowlesCourteney Cox Arquette Justin Timberlake and Luke RosinDavid Arquette Van HalenPenelope Cruz Ranbir KapoorGenelia De SouzaImran Khan
It was Pepsi first which understood varied needs of Indian taste and introducedvarious India centric products like ‘Kurkure’ and ‘Lays with Indian flavours’ .On the other hand Coca Cola considered India as a regional outpost until lastyear, but after the economy toppled else where they should take India seriouslyfrom now on.Now there are two other sections where they both are competing- energy drinksand Lemon water/mango juice/other juice.Pepsi entered into market with ‘Nimbooz’ which was success, and hence Cokeis planning to launch ‘Minute Maid Nimbu Fresh’ this year.Coke is also launched its energy drink ‘Burn’ last year to enter into the Rs 250crore energy drinks market. This whole thing proves that Coke is finally getting itsact right to become the number 1 Beverage player in India.
Over the last several years, Coca Cola stock has significantly outperformedPepsiCo.Coke delivered a 52% return to investors while Pepsi’s 13% return paled incomparison.Coca Cola’s market cap is currently 33% higher than Pepsi’s.Coke has a current ratio of 1.279 while Pepsi is at 1.436.Pepsi currently generates over 40% more revenue than Coca Cola over the pastthree years.It’s also important to note that there is less risk to Pepsi’s revenues given theirmore diversified product portfolio.
Based on their financial statements, in the last three years Return on assets: Coca Cola : 13.82%, 14.33% and 14.02%. PepsiCo : 16.34%, 14.29% and 14.92%. The return on equity: Coca Cola : 29.24 PepsiCo : 36.03 The Dividend payout ratio Coca Cola : 53% PepsiCo : 47% The price/earnings ratio Coca Cola : 19.7 PepsiCo : 16.3
The Return on Assets (ROA) is an indicator of how profitable a company is relative toits total assets. ROA gives an idea as to how efficient management is at using its assetsto generate earnings. ROA = Net income / Total Assets.The Return on Equity is the amount of net income returned as a percentage ofshareholders equity. Return on equity measures a corporation’s profitability by revealinghow much profit a company generates with the money shareholders have invested.Return on Equity = Net Income/Shareholder’s Equity.The Dividend Payout Ratio means the percentage of earnings paid to shareholders individends. The payout ratio provides an idea of how well earnings support the dividendpayments. Dividend payout ratio= Dividends per share / Earnings per share.The price/earnings ratio (P/E) is the best known of the investment valuationindicators. The P/E ratio has its imperfections, but it is nevertheless the most widelyreported and used valuation by investment professionals and the investing public.P/E = Market price of share/Earning per share