Coca-Cola has managed to outpace Pepsi on Wall Street, leveraging its streamlined beverage strategy to reach near-record stock prices, while Pepsi falters with its struggling snack division.
The stock price of Coca-Cola is at its highest level since the company went public over a century ago. In stark contrast, PepsiCo’s shares have dropped nearly 30% from their peak, which was slightly below $200 earlier this year.
Despite reporting better-than-expected profits for the second quarter, Pepsi’s results have not fully reassured investors, especially since sales in its essential North American beverage segment declined. Barron’s magazine has highlighted this concern.
Coca-Cola’s overall net revenue rose 6.4% to $24.2 billion, with the North American beverage sector contributing $7.2 billion to that figure.
Years ago, many saw Coke as the likely winner following a series of well-known competitions like the Pepsi Challenge and the infamous New Coke launch. Investors are now leaning towards that perspective, noticing how starkly different the financial situations of the two companies are.
The financial disparities between the two giants are particularly evident in terms of profitability. Coca-Cola’s operating margin stood at 35% for the first quarter, an increase from about 33% the previous year. By comparison, PepsiCo’s operating profit margin was around 16.5% for the first half of this year, which is less than half of Coca-Cola’s margin.
“It’s becoming clearer to investors that Coca-Cola has a solid business model,” Nick Mody from RBC Capital Markets pointed out.
PepsiCo’s ongoing issues mostly stem from its snack division and its bottling operations.
In 2025, snacks, including Lay’s, Doritos, and Cheetos, accounted for 58% of PepsiCo’s revenue. However, significant price increases during the pandemic have negatively impacted demand, with consumers shifting towards more affordable store-brand options.
North American snack food sales dropped 2% compared year-over-year in the second quarter, with no increase in volume.
PepsiCo’s CEO, Ramon Laguarta, indicated that the downturn in snack sales is also linked to rising gas prices, which have deterred customers from making impulse buys at convenience stores.
“Consumer conditions are worse than anticipated, largely due to gas prices,” he acknowledged during an investor call.
Filippo Farolni, a Citi analyst, noted that weakness in North America will persist as long as inflationary pressures from geopolitical tensions continue to affect the U.S. economy.
This situation poses risks for future estimates, as ongoing cost inflation is expected to impact profit margins, he added.
On the other hand, Coca-Cola’s main focus is on beverages. Its growth has been driven by products like Fairlife ultra-filtered milk and more expensive, smaller soda cans.
Coca-Cola keeps its overhead low by franchising a large portion of its bottling operations, whereas PepsiCo still retains ownership of about 80% of its bottlers, resulting in higher costs and squeezed margins.
PepsiCo’s recent struggles have drawn the interest of activist investor Elliott Investment Management. After acquiring $4 billion worth of PepsiCo stock, these investors are encouraging the company to streamline its operations, reduce prices, and explore refranchising its North American bottling network in a manner similar to Coca-Cola.
Responding to this pressure, Pepsi has agreed to initiate a significant restructuring plan, which involves cutting 20% of its U.S. product line, lowering prices on key brands, and closing several manufacturing facilities by early 2026.
While PepsiCo hasn’t fully opted for a franchising model, it has begun experimenting with integrated systems for distributing snacks and beverages to enhance efficiency.
RBC’s Mody suggested that the company might need to reevaluate its heavy ownership of manufacturing and distribution assets to boost profitability.
“They might have to make some tough decisions,” he said.
Coca-Cola’s stock experienced a rise in midday trading as its financial advantage over PepsiCo continues to grow.
As of 2 p.m. EDT, Coca-Cola stock was valued at $83.34, a 71-cent increase, or nearly 1%, compared to the previous day’s close of $82.63. The stock is hovering around a 52-week high of $85.68.
Conversely, PepsiCo shares declined by 56 cents, or 0.4%, trading at $137.30, approaching its 52-week low of $133.75 after a close of $137.86 on Thursday.
Coca-Cola is set to release its second-quarter financial results on July 28th.
