The epic cola wars between Coke and Pepsi ended decades ago, but lately Coke has become the clear winner with stock buyers, too.

That has become increasingly clear as the share price of Coca-Cola hovers near all-time highs while PepsiCo's is swooning. The stock price of the company behind Pepsi-Cola, Gatorade, Lay's, Doritos, and Cheetos has fallen nearly 30% since its 2023 highs just shy of $200.

Even Pepsi's better-than-expected earnings report Thursday wasn't enough to renew investors' confidence in its overall business model, as sales volumes in its core North America beverage division continued to shrink. Overall net revenue increased 6.4% to $24.2 billion in the second quarter, with North American beverage sales accounting for $7.2 billion of that.

"It's becoming more obvious to the investor base that Coke has a superior business model," Nik Modi, RBC Capital Markets co-head of global consumer research told Barron's.

The difference between the two rivals' operating margins hits that point home. Coke reported a 35% operating margin in the first quarter, up from around 33% for the same period last year. Meanwhile, Pepsi's operating margin for the first two quarters of the year has hovered around 16.5%, less than half of Coke's. (Coke reports its second-quarter earnings on July 28.)

The problems at Pepsi are twofold. Within its beverage business, "Gatorade is the only brand that is doing really well," Modi says. A bigger problem is that while Coke franchised most of its bottlers, Pepsi still owns about 80% of its bottlers, creating higher overhead.

The other issue is Pepsi's heavy reliance on its snack division.

"Pepsi's skew to packaged food and snacks has been a big issue," Modi noted. Those items accounted for 58% of its revenue in 2025. During the inflationary spike during the Covid pandemic, Pepsi aggressively raised prices on its snacks, putting a dent in sales as cash-crunched consumers switched to cheaper offerings.

While Pepsi has been trying to turn things around, that effort appears to have stalled. In North America, snack food revenue fell 2% in the second quarter from a year ago, while unit sales were flat.

Pepsi CEO Ramon Laguarta blamed moderating growth in the snack category in part on high gas prices putting pressure on consumers who might otherwise snap them up at gas stations and convenience stores.

"I think the consumer is worse than what we had anticipated and driven mainly by gas prices," he said on Thursday's earnings call.

In contrast, Coke is almost entirely beverage-focused. More recent additions like the Fairlife ultrafiltered milk products and growing "mini-can" sales of its soft drinks have helped growth. It has also kept costs in check by franchising its bottling business, something Modi says Pepsi might need to consider.

"They may have to make some tough choices," he added.

Shares of Pepsi fell 3.3% Thursday while Coke's were down 0.3%.

Write to Anita Hamilton at anita.hamilton@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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July 09, 2026 16:19 ET (20:19 GMT)

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