Non-alcoholic beverages and convenient foods. KO / PEP. Run 2026-10-09. Built from the filings in the research folder: KO 10-K FY2022 and FY2025, KO 10-Q for the quarter to 2026-07-03, KO calls of 2026-02-10, 2026-02-17 (CAGNY), 2026-07-28 and 2026-09-09; PEP 10-K FY2022 and FY2025, PEP 10-Q for the 36 weeks to 2026-09-05, PEP calls of 2026-02-03, 2026-07-09 and 2026-10-08 (Q&A only); plus a web sweep of company releases and SEC 8-K exhibits. Events swept 2025-10-01 to 2026-10-09. Most recent event checked: PepsiCo Q3 2026 results and EPS guidance cut, 2026-10-08 (for Coca-Cola: Rob Gehring named North America president, 2026-09-25). Figures in USD as reported; no conversion needed. PepsiCo has about twice the revenue ($93.9bn vs $47.9bn in 2025) because it sells snacks and owns more of its bottling, so the duel compares ratios, not absolutes. Not a valuation and not a recommendation.
Coca-Cola's next five years rest on two cells.
The first is emerging-market beverages. 84% of its unit cases are sold outside the US, and Mexico, China, Brazil and India alone are 33% (KO 10-K FY2025, Item 1). In those markets bottlers fund the capacity while Coca-Cola sells the concentrate. Refranchising in India, the Philippines, Bangladesh and Nigeria, plus the pending sale of Coca-Cola Beverages Africa, keeps converting low-margin bottling revenue into concentrate revenue.
The second is North America beverages. Price/mix there was +5% in 2025 and unit cases were back to +3% in the first half of 2026. fairlife's new Webster plant and the Monster distribution agreements add capacity and categories (KO 10-K FY2025; KO 10-Q, quarter to 2026-07-03; KO Q2 call).
PepsiCo has a real growth engine too, in international foods and beverages: EMEA +7%, Asia Pacific Foods +9% and International Beverages Franchise +8% organic in 2026 to date. Those cells are about 40% of revenue. The 59% in North America grew organically by 0% in foods and +1% in beverages, with beverage volume down 3% (PEP 10-Q, 36 weeks to 2026-09-05).
The same company wins growth and margins, so the tension sits inside PepsiCo instead. PepsiCo's growing cells are its thin-margin ones: EMEA earns a 14.3% core operating margin and Asia Pacific Foods 10.0% (PEP 10-K FY2025). Its biggest profit pool, North America foods, saw its core margin fall from 26.5% in 2023 to 23.8% in 2025, and it is now funding price cuts.
Coca-Cola converts growth through incidence pricing. The concentrate price is set as a share of the bottler's selling price, so retail price increases reach Coca-Cola without it carrying trucks or plants. Its geographic segment margins run from 25.9% in North America (30.8% before the BodyArmor impairment) to 59.1% in Latin America (KO 10-K FY2025).
The Cost Engine tab confirms where the gap sits. SG&A averaged 30.6% of sales at Coca-Cola and 40.1% at PepsiCo, because PepsiCo's delivery system lives in SG&A.
PepsiCo's biggest exposure is a fixed-cost North American delivery and bottling system selling into a market where volume is falling and one customer, Walmart, buys 14% of the total (PEP 10-K FY2025). When volume drops the trucks, plants and routes stay, so margin falls faster than sales. That is already happening: the 2026-10-08 guidance cut was driven by margin, not sales (PEP Q3 call).
Coca-Cola's biggest exposure is emerging-market currency and affordability. In 2025, +11 points of Latin America price/mix were wiped out by -12 points of currency. In the first half of 2026, Asia Pacific price/mix was -8 points as India lost share and affordability packs grew (KO 10-K FY2025; KO 10-Q, quarter to 2026-07-03; KO Q2 call). That hits dollar profit, not the system's volume or its cost base.
These five cells cover 88% of Coca-Cola's revenue and 95% of PepsiCo's. Every score is argued in the tabs below. Products differ inside the international cells: Coca-Cola's are beverages only, while PepsiCo's Latin America and Asia Pacific cells are foods, and its EMEA cell is 63% foods.
| Cell (product x region) | Coca-Cola | PepsiCo | Why (one clause, sourced) |
|---|---|---|---|
| North America beverages | 4 | 2 | Coca-Cola had 20% of US liquid refreshment beverages against PepsiCo's 16% (IRI, cited in PEP 10-K FY2025). Coca-Cola got +5 points of price/mix and unit cases returned to +3%. PepsiCo's beverage volume fell 3.5% in 2025 and 3% in 2026 to date, held up only by price (KO 10-K FY2025; PEP 10-K FY2025; PEP 10-Q, 36 weeks to 2026-09-05). |
| EMEA | 4 | 3 | Coca-Cola's unit cases grew 3% with a 39.7% segment margin. PepsiCo's +6% organic growth in 2025 came from +9 points of price on -3 points of volume, at a 14.3% core margin (KO 10-K FY2025; PEP 10-K FY2025). |
| North America convenient foods | 0 | 3 | PepsiCo holds "significant leadership positions" here, but organic revenue was -2% in 2025 and flat in 2026 to date, with -1% net price. This is a 3 only because volume turned positive in Q3 2026; another year of negative price makes it a 2 (PEP 10-K FY2025; PEP 10-Q, 36 weeks to 2026-09-05; PEP Q3 call). |
| Latin America | 5 | 3 | Coca-Cola: 59.1% margin, rising to 63.0% in the first half of 2026, and unit cases +2%. PepsiCo's foods business: +4.5% organic, all from price on flat volume, at a 20% core margin (KO 10-K FY2025; KO 10-Q, quarter to 2026-07-03; PEP 10-Q, 36 weeks to 2026-09-05). |
| Asia Pacific | 3 | 3 | Coca-Cola lost share in India, with price/mix -8 points and first-half margin down from 45.6% to 40.9%. PepsiCo's foods volume grew 10%, but price fell 2 points and the core margin was 10% (KO 10-Q, quarter to 2026-07-03; KO Q2 call; PEP 10-Q, 36 weeks to 2026-09-05; PEP 10-K FY2025). |
Each score ties to an exhibit in the tabs. Scores are per cell and are not added up, because a total across unlike cells would be false precision.
The labels needed normalizing. Coca-Cola reports by geography: North America, EMEA, Latin America, Asia Pacific, plus Bottling Investments. Since 2025 its EMEA segment has absorbed Costa, innocent and doğadan from the former Global Ventures segment (KO 10-K FY2025). PepsiCo reports a mix of product and region: Foods North America, Beverages North America, International Beverages Franchise, EMEA (37% beverages, 63% foods), Latin America Foods and Asia Pacific Foods (PEP 10-K FY2025). The cells below match regions, and the product is named where it differs. Coca-Cola's Bottling Investments and PepsiCo's International Beverages Franchise share one "other international beverages" row.
Revenue size misleads in North America beverages. Coca-Cola sells mostly concentrate to independent bottlers there, while PepsiCo sells finished drinks it bottles itself, so PepsiCo books more revenue per can. Operating profit is the fairer yardstick: Coca-Cola earned $6.0bn in the cell before its BodyArmor impairment, against PepsiCo's $3.3bn core.
| Cell | KO rev $m (% of total) | KO growth: 2y CAGR / 2025 org / 2026 YTD | PEP rev $m (% of total) | PEP growth: 2y CAGR / 2025 org / 2026 YTD | Margin signal / leader |
|---|---|---|---|---|---|
| North America beverages | 19,579 (41%) | 7.4% / 4% / 10% (inferred) | 28,197 (30%) | 1.0% / 1% / 1% | Coca-Cola leads. Its margin was 25.9% reported, or 30.8% before the impairment, against PepsiCo's core 11.7%. |
| North America convenient foods | 0 | n/a | 27,528 (29%) | -0.9% / -2% / 0% | PepsiCo only. Its core margin was 23.8%, down from 26.5% in 2023. |
| EMEA | 10,833 (23%) | 3.3% / 6% / 6% (inferred) | 18,025 (19%) | 5.4% / 6% / 7% | Coca-Cola leads on margin, 39.7% against PepsiCo's core 14.3%. PepsiCo leads on category breadth. |
| Latin America | 6,331 (13%) | 4.2% / 10% / 6% (inferred) | 10,549 (11%) | -0.1% / 4.5% / 4.5% | Coca-Cola leads: 59.1% against PepsiCo's core 20.3%. |
| Other international beverages | 5,726 (12%) | -14.6% / 2% / 10% (inferred) | 4,997 (5%) | 4.7% / 3% / 8% | PepsiCo leads here. Its concentrate franchise earns a 37.1% core margin, against 7.4% at the bottlers Coca-Cola still owns. |
| Asia Pacific | 5,328 (11%) | 5.2% / 5% / 3% (inferred) | 4,629 (5%) | 1.6% / 1.5% / 9% | Coca-Cola leads on margin (38.3% against 10.0%). PepsiCo leads on 2026 volume. |
CAGR covers 2023 to 2025 on reported revenue. 2026 YTD means the first half for Coca-Cola and 36 weeks for PepsiCo. Coca-Cola's margin is the segment operating margin it reports on third-party revenue. PepsiCo's is core, which excludes items affecting comparability. Sources: KO 10-K FY2025; PEP 10-K FY2025; KO 10-Q, quarter to 2026-07-03; PEP 10-Q, 36 weeks to 2026-09-05.
Emerging-market beverages (Coca-Cola). The driver is more servings in markets where consumption per person is still rising: Eurasia and Middle East unit cases +7% and Africa +3% in 2025, and Brazil +6%, Colombia +20% and Peru +16% in Q2 2026 (KO 10-K FY2025; KO 10-Q, quarter to 2026-07-03). Bottlers pay for the growth, so Coca-Cola's capex was only $2.1bn (4.4% of revenue) in 2025. The growth is organic. M&A works in the opposite direction, because refranchising removes revenue.
International foods (PepsiCo). PepsiCo is the only one of the two in this business. Asia Pacific Foods volume grew 10% and EMEA volume 3% in 2026 to date (PEP 10-Q, 36 weeks to 2026-09-05). The cost of this growth is owned plants and distribution, and it earns 10 to 20% core margins.
North America beverages. Coca-Cola grows through price and mix (+5 points in 2025), fairlife (+18% in Q1 2026 as the Webster plant ramped) and the Monster distribution agreements. PepsiCo's beverage volume fell even after adding Alani Nu through the Celsius deal, and Alani drove about half of PepsiCo's North America beverage gross-margin decline in Q2 2026 (KO Q2 call; PEP Q2 call; PEP 10-K FY2025 Note 4).
Coca-Cola sells concentrate to bottlers under incidence-based pricing, so its price rises when the bottler's shelf price rises. US bottlers sign 10-year renewable agreements with mandatory incidence pricing (KO 10-K FY2025). PepsiCo sells finished goods to retailers through its own delivery system. Walmart and Sam's Club bought 14% of its revenue in 2025 (PEP 10-K FY2025).
The difference shows in 2026. Coca-Cola realized +3 points of pricing in Q2 (KO Q2 call). PepsiCo cut prices on Lay's, Doritos, Cheetos and Tostitos by up to about 15% (NPR, 2026-02-03), and its North America snack net price fell 1% year to date (PEP 10-Q, 36 weeks to 2026-09-05). On the Q2 call, an analyst pointed to price rollbacks announced by PepsiCo's biggest US customer.
| Dimension | Coca-Cola | PepsiCo |
|---|---|---|
| Who owns production | Mostly independent bottlers. 85% of unit cases are concentrate. | Owned bottling in North America and EMEA, plus owned snack plants. 36% of revenue comes from company-owned bottlers. |
| Named concentrations | Sucralose is a "critical raw material"; Cutrale is the primary orange-juice supplier; fairlife's milk comes from a few dairy cooperatives; cans come from a limited number of suppliers. | Buys "from multiple geographies and suppliers". Single-source dependency: ND. |
| Recent incidents | A fairlife ransomware attack suspended US production in July 2026; operations were mostly restored by 2026-07-27 (KO release). | A 6-point tariff hit to North America beverages in 2025, refunded in 2026, and a 22-point commodity hit in EMEA in 2025. Input costs are "trending higher" again (PEP Q3 call). |
| Gross margin through the 2021-22 inflation | 60.3% in 2021, 58.1% in 2022, 61.6% in 2025 | 53.4% in 2021, 53.0% in 2022, 54.1% in 2025 |
Gross margins are computed from the 10-K FY2022 and FY2025 income statements. Part of Coca-Cola's recovery comes from mix, because refranchising removes low-margin bottling revenue.
In US liquid refreshment beverages, Coca-Cola had about 20% of retail sales in measured channels in 2025 against PepsiCo's 16%. PepsiCo itself states that Coca-Cola has a "significant carbonated soft drink share advantage in many markets outside the United States" (IRI, cited in PEP 10-K FY2025). PepsiCo also names its other competitors: Keurig Dr Pepper, Monster (21% owned by Coca-Cola), Red Bull, Nestlé and Primo in beverages, and Campbell's, Conagra, Hormel, Kraft Heinz, Mars, Mondelēz and Utz in snacks. Share by snack cell: ND in sources. Coca-Cola says it has gained value share for 19 straight quarters (KO Q4 call). PepsiCo says it is gaining US snack volume share after its price reset and is "starting to turn that into value share" (PEP Q3 call).
North America beverages. Sparkling soft drinks are 61% of Coca-Cola's US unit cases, and Trademark Coca-Cola alone is 42% (KO 10-K FY2025). About 10 states restricted soda in SNAP by May 2026, with about 20 expected by year-end. Numerator estimates up to $430m of lost soda sales in 2026 (Baking Business, 2026-06-01). Coca-Cola is more exposed by share. PepsiCo does not disclose its US sparkling share: ND. North America foods. PepsiCo plans on "broader adoption of GLP-1" (PEP Q4 call). Fewer snacking occasions spread over a fixed delivery network are the mechanism that compresses margin. Emerging markets. Coca-Cola is more exposed to currency. Its Latin America currency hit was -12 points in 2025 (KO 10-K FY2025).
A global bottler system (durability: High). The five largest bottlers sell 44% of all unit cases. Equity-method investees had $102.8bn of revenue in 2025, and the system sold 33.8bn unit cases (KO 10-K FY2025). Rebuilding that network would take decades, not money.
Brand weight (High). Coca-Cola has 32 billion-dollar brands (KO Q4 call) and spent $5.4bn on advertising in 2025, 11.3% of revenue (KO 10-K FY2025).
Energy through Monster (Medium). It owns 21% of Monster, carried at $5.6bn against a $15.7bn fair value.
Snack leadership plus delivery to the store (High for the brand, Medium for delivery). Lay's and Tostitos are multi-billion-dollar brands, and PepsiCo claims "significant leadership positions" in convenient foods (PEP 10-K FY2025). Its own 10-K warns of "customers moving away from DSD systems", which weakens the delivery leg.
Category breadth (Medium). Foods are 58% of revenue, so PepsiCo is less exposed to sugar regulation. It spent $3.4bn on advertising in 2025, down from $3.9bn in 2024 (PEP 10-K FY2025).
Coca-Cola: one bottler, not named and probably Coca-Cola Europacific Partners (inferred), was 10% of revenue in 2025. Pricing is incidence-based, and price/mix was +4 points in 2025 on +1 point of volume (KO 10-K FY2025). PepsiCo: Walmart is about 14% of revenue across all segments. PepsiCo's effective net pricing was +4 points in 2025 but only +2 points in 2026 to date, and -1 point in North America foods (PEP 10-K FY2025; PEP 10-Q, 36 weeks to 2026-09-05).
Coca-Cola's input exposure runs mostly through bottlers. Its own named concentrations are sucralose, Cutrale juice and fairlife's milk co-ops, and its commodity hedges have a $535m notional value (KO 10-K FY2025). PepsiCo buys a wide agricultural basket (potatoes, corn, oils, wheat, sugar and more) plus packaging, and hedges a $1.7bn notional for 6 to 12 months. Those hedges are now rolling off into higher costs (PEP 10-Q, 36 weeks to 2026-09-05; PEP Q3 call). Coca-Cola's July 2026 fairlife outage shows its single-plant risk in a fast-growing brand.
| Cell | Route control | Pocket price | Continuity | Outcome (share / margin) | Confirming KPI |
|---|---|---|---|---|---|
| North America beverages | Coca-Cola: independent bottlers on incidence pricing. PepsiCo: owned bottling and delivery. | Coca-Cola: +5 points price/mix in 2025, +3 points in 2026. PepsiCo: +5 points, then +4 points, but on falling volume. | Coca-Cola: fairlife outage, BodyArmor impairments. PepsiCo: Rockstar impairment, replaced by Alani Nu. | Coca-Cola: share up, margin up. PepsiCo: share down, core margin up slightly (10.7% to 11.7%). | PepsiCo North America beverage volume against Coca-Cola North America unit cases, quarterly. |
| North America convenient foods | PepsiCo only: owned delivery to retailers. | PepsiCo below its own prior price: -1 point net price in 2026 to date. | Three plants closed in 2025 and about 20% of US SKUs being cut (PEP 8-K, 2025-12-08). | PepsiCo: volume share up, margin down (core 26.5% to 23.8%, 2023 to 2025). | PepsiCo North America foods core margin at or above 24% in FY2027. |
| EMEA | Coca-Cola: bottlers (CCEP, CCHBC). PepsiCo: owned bottlers plus foods. | Coca-Cola: +2 to +3 points price/mix. PepsiCo: +9 points in 2025, +4 points in 2026. | PepsiCo: dairy, potato and oil cost shock in 2025. | Both hold share. Coca-Cola margin flat (43.6% in H1 2026); PepsiCo margin rising (14.6% in 2026 to date). | PepsiCo EMEA core margin at or above 15% for FY2026. |
The triangle confirms the growth map. In PepsiCo's biggest cells, power sits with the retailer. Its only cell with a Coca-Cola-like margin is the International Beverages Franchise, where it uses the same concentrate model.
1. Model: franchise against owned delivery (Major). Coca-Cola gets 59% of its revenue from concentrate. PepsiCo gets 36% from owned bottling, and its distribution costs sit in SG&A. To close the gap PepsiCo would have to refranchise North America bottling. Its 10-K only says it is "carefully evaluating an integrated model", and on the Q3 call it spoke of a "hybrid approach". That would take years, not 18 months. 2. Brand investment (Moderate). Coca-Cola spent $5.4bn on advertising, PepsiCo $3.4bn (KO 10-K FY2025; PEP 10-K FY2025). Money can close this gap, but PepsiCo cut advertising in 2025 and is only now raising it again (PEP Q3 call). 3. Category exposure (Moderate, direction uncertain). Snacks protect PepsiCo against sugar regulation but expose it to GLP-1 and to private label. Neither company can change its category exposure quickly.
Both companies report costs by function under US GAAP, so the mapping is direct. The figures are cost of goods sold (Coca-Cola) or cost of sales (PepsiCo), SG&A, and operating income. Two reconciliation notes apply. First, Coca-Cola books most shipping and handling in cost of goods sold, while PepsiCo books distribution in SG&A (KO 10-K FY2025 Note 1; PEP 10-K FY2025 Note 1). That flatters PepsiCo's gross margin, so EBIT is the clean comparison. Second, R&D is ND for Coca-Cola, which does not disclose it. PepsiCo discloses R&D of $804m, $813m and $839m, all inside SG&A. One-off lines (Coca-Cola's "other operating charges", PepsiCo's impairments) are left out of SG&A but kept in EBIT, and EBIT is also shown before them.
| % of sales, 3y avg 2023-25 | Coca-Cola | PepsiCo | Gap | What drives it |
|---|---|---|---|---|
| COGS | 39.3 | 45.7 | -6.4 | Concentrate mix. The gap is understated because Coca-Cola keeps shipping costs in COGS. |
| R&D | ND | 0.9 | ND | Not disclosed by Coca-Cola. Immaterial in both models. |
| SG&A | 30.6 | 40.1 | -9.5 | PepsiCo's store delivery and distribution sit here. |
| Gross margin | 60.7 | 54.3 | +6.4 | Concentrate (Coca-Cola) against finished goods and snacks (PepsiCo). |
| EBIT margin | 24.9 | 13.1 | +11.8 | Before one-off charges: 30.1 against 14.2, a gap of +15.9 points. |
| Year | KO COGS | KO SG&A | KO GM | KO EBIT (before charges) | PEP COGS | PEP SG&A | PEP GM | PEP EBIT (before impairments) |
|---|---|---|---|---|---|---|---|---|
| 2023 | 40.5 | 30.5 | 59.5 | 24.7 (29.0) | 45.8 | 40.1 | 54.2 | 13.1 (14.1) |
| 2024 | 38.9 | 31.0 | 61.1 | 21.2 (30.1) | 45.4 | 40.5 | 54.6 | 14.0 (14.1) |
| 2025 | 38.4 | 30.3 | 61.6 | 28.7 (31.3) | 45.9 | 39.8 | 54.1 | 12.2 (14.4) |
Raw values in $m. Coca-Cola revenue: 45,754 / 47,061 / 47,941; COGS: 18,520 / 18,324 / 18,397; SG&A: 13,972 / 14,582 / 14,521; other operating charges: 1,951 / 4,163 / 1,261; operating income: 11,311 / 9,992 / 13,762. PepsiCo revenue: 91,471 / 91,854 / 93,925; cost of sales: 41,881 / 41,744 / 43,066; SG&A: 36,677 / 37,190 / 37,368; impairment of intangibles: 927 / 33 / 1,993; operating profit: 11,986 / 12,887 / 11,498. The fiscal years match: Coca-Cola's ends on December 31, PepsiCo's on the last Saturday of December. In 2026 to date, Coca-Cola's operating margin was 34.9% (first half) and PepsiCo's 16.7% (36 weeks; the prior year included the Rockstar impairment) (KO 10-Q, quarter to 2026-07-03; PEP 10-Q, 36 weeks to 2026-09-05).
The most persistent difference is operating margin before one-off charges. Coca-Cola led by 14.9 points in 2023, 16.0 in 2024 and 16.9 in 2025, so the gap widened each year. The mechanism is the one found in the power map: PepsiCo pays for delivery, merchandising and owned bottling through SG&A (40% of sales), while Coca-Cola's bottlers carry those costs outside its income statement. The cost gap therefore confirms the power map rather than contradicting it, and the high margin is the visible result of Coca-Cola's pricing power.
Part of PepsiCo's gap is self-inflicted, though. Its North America beverage core margin of 11.7% sits far below the 37.1% of its own concentrate franchise. The SKU cuts, plant closures and record productivity savings promised in the Elliott settlement (PEP 8-K, 2025-12-08) are fixable items that new execution could recover. A 100-basis-point improvement would not change the ranking.
| Metric | Threshold | By when | If it hits, it favors | Where published |
|---|---|---|---|---|
| Coca-Cola worldwide unit case volume, with consolidated price/mix | Volume +2% or more and price/mix +2 points or more, FY2026 and FY2027 | Feb 2027; Feb 2028 | Coca-Cola | KO Q4 releases, 10-K |
| Coca-Cola operating margin before other operating charges | 31% or above (31.3% in FY2025) | FY2026, Feb 2027 | Coca-Cola | KO 10-K income statement |
| Coca-Cola Asia Pacific segment margin | Back to 43% or above (40.9% in H1 2026) | FY2027, Feb 2028 | Coca-Cola if hit; PepsiCo narrows the gap if missed | KO 10-K segment note |
| PepsiCo North America foods organic volume and effective net pricing | Volume +2% or more with price 0% or above | FY2027, Feb 2028 | PepsiCo | PEP 10-K organic table |
| PepsiCo North America beverages core operating margin | 13% or above (11.7% in FY2025), or a refranchising decision announced | Update promised for late 2026; FY2027 results | PepsiCo | PEP 8-K and investor update; 10-K |