Business

The Battle of the Business Models: Coca-Cola vs. Pepsi

by Larry Bryant June 20, 2022
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Both Coca-Cola and Pepsi are dominating the beverage market. Which company will come out on top? While it may seem that Coca-Cola and Pepsi have similar business models, there are actually quite a few differences between the two companies that account for their success in different markets. By comparing Coca-Cola and Pepsi’s business models, you can learn how they use products, prices, distribution channels, marketing strategies, and more to target customers across the globe.

Coke and Pepsi are both carbonated soft drinks, so what’s the difference between them?


For decades, Coke and Pepsi have battled for dominance in convenience stores, restaurants, and grocery stores across America. While both brands are worth billions—Pepsi net worth more than double Coke’s net worth at $80 billion to Coke’s $37 billion—the companies have very different business models and strategies for success; some would say one has been more successful than others when it comes to diversification efforts over time. But what makes each company tick? Let’s look at how they got start and where they stand today to see if we can answer that question.

How has Coke maintained its market share dominance over all these years?


You might think that a big corporation like Coca-Cola would have its business model figured out, and if you looked at their brand value alone, you’d be pretty close to being right: Coca-Cola is number 4 on Forbes’s most valuable brands list, worth $79 billion. However, Coke has suffered a small drop in share over recent years, as Pepsi has slowly but surely gained market share against their top competitor and sent them scrambling for new strategies. If it were easy to come up with a new strategy for maintaining dominance in such an enormous market with so many variables (age demographics, pricing elasticity), everybody would be doing it—so what’s holding Coke back?

So what does this mean for you as a consumer?


Because both businesses tend to stay away from extremes, they often lead their categories when it comes to taste and innovation, rather than price point or variety (in terms of products). Basically, you should enjoy whatever drink you choose because in most cases, your money will be well spent. But there is a difference: Pepsi net worth is three times that of Coke. Now there’s a big difference between revenue and net worth—Revenue is what a company earns by selling its goods or services; Net Worth is what remains once debt has been subtract from assets—but if we look at revenue alone, PepsiCo brings in more than twice as much money as Coca-Cola does.

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