PepsiCo, Inc. and Dr Pepper Snapple are Coke’s two primary competitors, but other rival firms include Nestlé SA, Groupe Danone, Suntory Beverage & Food Limited (“Suntory”), and Monster Beverage Corporation. Unlike Coke, PepsiCo derives most of its revenues and growth from its snack food business
EXHIBIT 10 A Comparison of Coke to Two Big Rivals
COKE DR PEPPER PEPSICO
Market Capitalization $ 197B $ 17B $ 167B
# of Employees 100,300 20,000 264,000
Revenue $ 41.8B $ 6.6B $ 63.5B
Profit Margin 10.68% 11.73% 10.97%
EBITDA $ 10.9B $ 1.6B $ 12.6B
Operating Margin 24.14% 20.73% 16.4%
Net Income $ 6.5B $ 770M 47.0B
ROA 6.23% 9.09% 8.56%
EPS $ 0.95 $ 4.17 $ 4.84
As indicated in Exhibit 10, Coke is 11 times larger than Dr Pepper Snapple and is 18 percent larger than PepsiCo based on market capitalization (stock price times number of shares outstanding).
However, PepsiCo is much larger than Coke on numerous other variables as given.
EXHIBIT 9 Coke and Rival Firms on Top Beverage Brands Sold (2016 and 2015)
Brand Firms
Millions of Gallons 2015
Millions of Gallons 2016
Percentage Change
Share in Total 2015
Share in Total 2016
1. Coke (all types) Coca-Cola 3,994 3,933 (1.5) 12.6 12.0
2. Pepsi (all types) PepsiCo 1,946 1,859 (4.5) 6.1 5.6
3. Mountain Dew PepsiCo 1,343 1,333 (0.7) 4.2 4.1
4. Dr Pepper (all types) Dr Pepper Snapple
1,160 1,168 0.7 3.6 3.5
5. Nestlé Pure Life Nestlé NAmerica
1,075 1,085 1.0 3.4 3.3
6. Gatorade PepsiCo 1,042 1,082 3.8 3.3 3.3
7. Sprite Coca-Cola 866 897 3.6 2.7 2.7
8. Poland Spring Nestlé
NAmerica
758 836 10.3 2.4 2.5
9. Dasani Coca-Cola 707 743 5.0 2.2 2.3
10. Aquafina PepsiCo 546 605 10.9 1.7 1.8
TOP 10 13,437 13,541 0.8 42.2 41.2
Others 18,387 19,364 5.3 57.8 58.8
Total 31,824 32,904 3.4 100.0 100.0
Source: Based on information developed by Beverage Marketing Corporation.
PepsiCo, Inc. (PEP)
Headquartered in Purchase, New York, PepsiCo’s beverage products include Pepsi, Gatorade, Mountain Dew, Diet Pepsi, Aquafina, Diet Mountain Dew, Tropicana Pure Premium, Mist Twist, and Mug brands; and ready-to-drink tea and coffee, and juices. PepsiCo’s Frito-Lay segment offers Lays and Ruffles potato chips; Doritos, Tostitos, and Santitas tortilla chips; and Cheetos cheese-flavored snacks, branded dips, and Fritos corn chips. PepsiCo’s Quaker Foods segment provides Quaker oat- meal, grits, rice cakes, granola, and oat squares; and Aunt Jemima mixes and syrups, Quaker Chewy granola bars, Captain Crunch cereal, Life cereal, and Rice-A-Roni side dishes.
PepsiCo obtains about 60 percent of its revenues from food and snacks, not beverages. PepsiCo and Coca-Cola are both investing in craft soda brands trying to reverse decreasing soda volume sales.
After acquiring two craft soda brands from Monster Beverages, Coca-Cola recently relaunched Blue Sky and Hansen’s. A few days later, PepsiCo launched the 1893 Original Cola and Ginger Cola lines, which are made with sparkling water, kola nut extract, and Fair Trade–certified sugar.
PepsiCo is having trouble with its Gatorade energy drink brand whose sales in the United States declined 0.5 percent to $5.9 billion in 2017. This was the brand’s first decline in annual sales since 2012. Gatorade accounts for about 20 percent of PepsiCo’s North American drink volume. The com- pany released Gatorade Organic in August 2016 and made $20 million on that product through the end of 2017. The sports-drink market is becoming highly competitive; even up-start BodyArmour, a distant third in market share, is gaining rapidly on PepsiCo in sports drinks, such as Gatorade.
Dr Pepper Snapple Group, Inc. (DPS)
Headquartered in Plano, Texas, DPS manufactures nonalcoholic beverages in the United States, Canada, Mexico, and the Caribbean. It also markets ready-to-drink teas, juices, juice drinks, water, and mixers. The company offers brands such as: 7UP, A&W, Bai, Crush, Canada Dry, Schweppes, Sunkist soda, Squirt, Hawaiian Punch, and RC Cola. DPS manufactures and sells Mott’s apple sauces. DPS’s revenues increased slightly from $6.2 billion in 2014 to $6.3 billion in 2015, to $6.4 billion in 2016, to $6.7 in 2017. DPS’s net income also has increased slightly every year, from $703 million in 2014 to $770 million in 2017. DPS recently acquired Bai Brands for about $1.7 billion. DPS currently has about 8.5 percent of the U.S. nonalcoholic beverage market, according to Euromonitor International.
DPS owns seven of the top 10 noncola soft drinks on the market. Third-quarter (Q3) 2017 results showed DPS’s carbonated soft drinks decreasing 1 percent, whereas its noncarbonated beverages in- creased 6 percent. Q3 showed flat sales in the United States and Canada, but sales in Mexico and the Caribbean increased 2 percent. Also for Q3, the DPS brand named Clamato grew 7 percent and Mott’s sauce sales grew 5 percent, but Snapple sales declined 5 percent.
The big news in the beverage industry is that Keurig Green Mountain, the maker of Keurig K-Cup coffee machines, acquired Dr Pepper Snapple in 2018. Keurig is privately owned by JAB Holdings, one of Europe’s largest investment firms; JAB also owns Peeet’s Coffee, Panera Bread, and Krispy Kreme doughnuts. JAB is a privately held fund that manages the money of the Reimann family, one of Germany’s wealthiest families. This acquisition is aimed directly at both Coca-Cola and Starbucks Corp. This acquisition puts Keurig in the global soda business and strengthens its coffee business.
Euromonitor reports that sales of ready-to-drink coffees increased more than 17 percent in 2017.
JAB’s partner in Keurig is Mondelez International that holds roughly 24 percent of the stock JAB, but that percentage dropped to about 14 percent when the Dr Pepper acquisition was finalized. Keurig’s revenue for 2017 was about $4.1 billion and its market share in the coffee-pod industry has declined from 40 percent in 2013 to about 23 percent in 2017.
Groupe Danone
Headquartered in Paris, France, Groupe Danone is the number-one producer of yogurt in the world, the number-two bottled water and baby nutrition manufacturer, number-one in manufacturing fresh dairy products, and the European leader in medical nutrition. Danone’s primary brand in bottled water is Evian.
Danone sells flavored waters and focuses on health-conscious consumers. One brand is Levite, a big suc- cess in Mexico. Danone continues to add new drinks in different markets, such as Taillefine Fiz in France, which is a zero-calorie soda that has achieved a number-two ranking in the French low-calorie segment.
Danone is present in more than 130 markets and generated sales of €21.9 billion in 2016, with more than half of that revenue coming from emerging countries. Fresh dairy products represent about 50 percent of Danone’s total sales, early life nutrition 22 percent, water 21 percent, and medical nutrition 7 percent.
Monster Beverage Company (MNST)
Headquartered in Corona, California, Monster Beverage develops, markets, sells, and distributes energy-drink beverages, sodas, or concentrates for energy-drink beverages, under brand names such as Monster Energy, Monster Rehab, Monster Energy Extra Strength Nitrous Technology, Java Monster, Muscle Monster, Mega Monster Energy, Punch Monster, Juice Monster, Ubermonster, BU, Mutant Super Soda, Nalu, NOS, Burn, Mother, Ultra, Play and Power Play, Gladiator, Relentless, Samurai, BPM, and Full Throttle.
Coca-Cola owns 16.7 percent of the Monster Beverage, which it purchased in 2015 for approx- imately $2.15 billion. In addition to the equity stake, both companies’ strategic partnerships related to business transfers and expanded global distribution. In October 2017, Coca-Cola transferred ownership of all of its worldwide energy businesses including NOS, Full Throttle, and nine smaller brands to Monster Beverage Company. At the same time, Monster transferred all of its nonenergy drink businesses to Coca-Cola, including Hansen’s natural sodas, Peace Tea, Hubert’s Lemonade, and Hansen’s juice products. As shown in Exhibit 10, energy drinks comprise 4.8 percent of all nonalcoholic beverages sold.
Monster Beverage’s sales for Q3 2017 that ended September 30, 2017, increased 11.5 percent to
$2.6 billion from $2.3 billion versus the prior year. Net income for Q3 was $619.4 million, compared with $539.7 million the prior year. Net sales for Monster’s Strategic Brands segment, which includes the various energy drink brands acquired from Coke, increased 6.2 percent to $76.6 million for that Q3, up from $72.1 million the prior year. Monster’s sales to customers outside the United States in- creased 36.3 percent to $260.1 million in that Q3, up from $190.8 million in the prior year period. Net income for Q3 increased 14.1 percent to $218.7 million from $191.6 million in the prior year period.