Coca-Cola is a pure beverage company that mostly sells concentrate to independent bottlers; PepsiCo is a drinks-and-snacks company that owns much of its own bottling and food manufacturing. That is why PepsiCo had almost twice the revenue in fiscal 2025 ($93.9 billion against Coca-Cola’s $47.9 billion) but a much thinner operating margin (12.2% against 28.7%). Coca-Cola sells beverages in more than 200 countries and territories; PepsiCo sells beverages and convenient foods, such as Lay’s, Doritos and Quaker, in more than 200 countries and territories.
How the two models make money
01
Coca-Cola sells concentrate
Coca-Cola's concentrate operations sell beverage bases and syrups to bottling partners, which add water and sweeteners, package and distribute the drinks. In fiscal 2025 concentrate operations were 59% of net operating revenues; finished product operations, mainly bottlers it owns, were 41%.
02
PepsiCo owns more of the chain
PepsiCo Beverages North America runs its own bottling plants and distribution and sells finished goods to retailers. Beverage revenue from company-owned bottlers was 36% of PepsiCo's consolidated net revenue in fiscal 2025, and the 10-K notes these operations earn lower margins than concentrate sold to bottlers.
03
PepsiCo adds snacks
In fiscal 2025 beverages were 42% and convenient foods 58% of PepsiCo's net revenue. Lay's, Doritos and Quaker sit beside Pepsi, Gatorade and Mountain Dew, and PepsiCo's direct-store-delivery systems carry both beverages and convenient foods to retail stores.
04
Margins follow the asset mix
Coca-Cola's operating margin was 28.7% in fiscal 2025 on $47.9 billion of revenue; PepsiCo's was 12.2% on $93.9 billion. Net income attributable to shareholders was $13.1 billion at Coca-Cola and $8.2 billion at PepsiCo.
What changed in 2025-26
AI shopping agents as a named risk
PepsiCo’s fiscal 2025 10-K lists the use of artificial intelligence shopping agents that autonomously select products that may not be ours among shifts in channel preferences. Coca-Cola’s 10-K warns that e-commerce and comparison shopping could threaten some legacy route-to-market strategies.
PepsiCo buys into better-for-you drinks
PepsiCo acquired prebiotic soda brand poppi on 19 May 2025 for $1.95 billion in cash plus contingent consideration, after buying Mexican-American foods business Siete on 17 January 2025 for $1.2 billion. In August 2025 it took convertible preferred shares in Celsius and became exclusive distributor of Alani Nu in certain US channels.
Coca-Cola keeps shedding bottlers
Coca-Cola agreed in October 2025 to sell a portion of its African bottling operations to Coca-Cola HBC, the latest step in refranchising owned bottlers to independent partners. Bottling Investments earned a 7.4% operating margin in fiscal 2025.
Latest quarter
In the third quarter of 2026 Coca-Cola’s net revenues grew 7% to $13.4 billion with a 33.4% operating margin, under CEO Henrique Braun. PepsiCo’s third-quarter net revenue rose 5.6% to $25.3 billion with a 16.9% operating margin, and chairman and CEO Ramon Laguarta said additional structural cost reductions are being identified.
PepsiCo$5.4 billion advertising and marketing, of which $3.4 billion advertising
US liquid refreshment beverages (estimated retail sales, measured channels)
Coca-ColaAbout 20%
PepsiCoAbout 16%
What it means for you
Compare business models on margin and assets, not revenue: PepsiCo's larger top line comes with owned plants and a lower margin.
Decide which layer you must own. Coca-Cola owns brand and formula and franchises bottling; PepsiCo owns more of the chain to bundle drinks and snacks.
Use a second product line to share distribution costs, as PepsiCo does with snacks and drinks on the same delivery routes.
Watch AI shopping agents: if software picks the product, brand recall and shelf placement count for less, so make your product easy for agents to choose.
Read the segment notes: owned bottling and North American beverages carry most of the margin pressure in both companies.
The Business Engineer lens
Coca-Cola and PepsiCo show two answers to the same question: own the scarce layer only, or own the whole route to the shelf and fill it with more products. The Business Engineer reads AI shopping agents as a test of both, because an agent that compares products weakens habit and shelf space, the moats both companies built.
Who has the bigger business, Coca-Cola or PepsiCo?
By revenue, PepsiCo: $93.9 billion in fiscal 2025 against Coca-Cola's $47.9 billion. By profit, Coca-Cola: $13.1 billion of net income against PepsiCo's $8.2 billion.
Why is Coca-Cola more profitable than PepsiCo?
Coca-Cola mostly sells high-margin concentrate to independent bottlers, while PepsiCo owns more bottling and food manufacturing, which brings revenue but lower margins: 28.7% against 12.2% operating margin in fiscal 2025.
Does PepsiCo make more from snacks or drinks?
Snacks and other convenient foods: 58% of net revenue in fiscal 2025, against 42% from beverages.
Who leads in US soft drinks?
PepsiCo's 10-K estimates that in 2025 Coca-Cola had about 20% and PepsiCo about 16% of the US liquid refreshment beverage category by retail sales in measured channels.
The complete explainer, cleaned up and reformatted for mobile.
Elements
Coca-Cola
Pepsi
Similarities
Differences
Competitive Advantage
Customer Segments
Global consumers, restaurants, retailers
Global consumers, restaurants, retailers
Both target global consumers and have strong partnerships with restaurants and retailers.
Coca-Cola has a broader portfolio of beverage brands, including non-carbonated drinks. PepsiCo includes a diverse range of snacks and food products in addition to beverages.
Extensive brand recognition and global presence (Both).
Refreshing, iconic beverage brands, diverse portfolio
Both provide refreshing, iconic beverage brands with emotional appeal. Coca-Cola offers a wide range of carbonated and non-carbonated drinks. PepsiCo combines beverages with a diverse portfolio of snacks and food products.
Coca-Cola emphasizes its beverage brands and their emotional connection with consumers. PepsiCo positions itself as a diversified food and beverage company with a broader product range, including snacks and foods.
Wide beverage portfolio and emotional appeal (Both).
Channels
Distributors, retail stores, vending machines
Distributors, retail stores, vending machines
Both use similar channels such as distributors, retail stores, and vending machines to reach consumers.
Coca-Cola focuses more on the distribution and sale of beverages through partnerships with restaurants and retailers. PepsiCo extends its presence into snack and food aisles, utilizing its diversified product portfolio.
Extensive distribution networks (Both).
Customer Relationships
Brand loyalty, marketing campaigns, customer service
Brand loyalty, marketing campaigns, customer service
Both build customer relationships through brand loyalty, marketing campaigns, and customer service efforts.
Coca-Cola’s primary focus is on beverage-related customer relationships. PepsiCo maintains relationships in both the beverage and snack/food segments.
Strong brand loyalty and marketing (Both).
Key Activities
Beverage production, marketing, brand management
Beverage production, marketing, brand management
Both engage in beverage production, marketing, and brand management.
Coca-Cola primarily focuses on beverage-related activities. PepsiCo engages in both beverage and snack/food production, marketing, and brand management.
Both rely on key resources such as iconic beverage brands and production facilities.
Coca-Cola’s key resources are concentrated on beverage brands and related production. PepsiCo’s resources are diversified to include beverage, snack, and food brands, along with production facilities.
Iconic beverage brands (Both).
Key Partnerships
Bottling partners, distribution networks
Bottling partners, distribution networks
Both collaborate with bottling partners and utilize distribution networks to ensure global reach.
Coca-Cola maintains strong partnerships with bottlers and distributors for its beverage products. PepsiCo extends these partnerships to include snacks and food products in addition to beverages.
Well-established bottling partnerships (Both).
Revenue Streams
Beverage sales, licensing, advertising
Beverage sales, licensing, advertising
Both generate revenue primarily from beverage sales, licensing of brands, and advertising.
Coca-Cola derives most of its revenue from beverage sales, while PepsiCo generates revenue from a diversified product portfolio that includes beverages, snacks, and foods.
Diversified revenue streams (PepsiCo).
Cost Structure
Production costs, marketing expenses
Production costs, marketing expenses
Both incur costs related to production, marketing, and distribution.
Coca-Cola’s cost structure is primarily associated with beverage production and marketing. PepsiCo’s cost structure is more complex due to its diversified product range, encompassing beverages, snacks, and foods.
Beverage-focused cost structure (Coca-Cola).
Drawing by The Business Engineer.
Coca-Cola generated $45.75 billion in revenue, compared to PepsiCo’s $91.47 billion in 2023.ย
PepsiCo has its primary operations in the US. Coca-Cola is the largest beverage company in the world. PepsiCo diversified between beverages and food, where food represented 53% of its revenues in 2017.
Both companies have massive distribution strategies, and nonetheless the size, they have a relatively quick decision-making process.
That is critical as both companies top into consumer habits. Therefore, they need to be fast in adapting to them. Both companies also spend massive resources on demand generation via marketing activities.
Why do Coke and Pepsi have different business models
At first sight, Coca-Cola and Pepsi might seem to have a business model which not only is similar but, in a way, compete with each other.
While this is true, it is also true that those companies have two different business model and a portfolio of products that, in many cases, doesn’t overall.
Indeed, we’ll see why and in which respect the Coca-Cola Company and PepsiCobusiness model are similar and where they differ.
Product: where Coca-Cola is about beverages, PepsiCo is quiteย diversifiedย
One aspect in which Coca-Cola and PepsiCo differ quite a lot in their product offering. While Coca-Cola is primarily about beverages, PepsiCo is about food and drink.
Coca-Cola generated over $43 billion in revenue in 2022 and over $9.5 billion in net profits.
Coca-Cola Portfolio: from Coca-Cola Annual Report
PepsiCo Portfolio: from PepsiCo Annual Report
Thus, while Coca-Cola is the largest beverage company in the world, PepsiCo has a vast array of products ranging from food and beverage.
If you look at the mix of revenues of PepsiCo, convenient foods represented 58% of net revenue in fiscal 2025, while beverages represented 42%.
Therefore, where in the minds of consumers Coke and Pepsi might be perceived as direct competitors, if we look at their business models, those look entirely different regarding product offerings and mix.
Where Coca-Cola is a beverage company, PepsiCo draws its strength from offering snacks, complimentary to soft drinks.
This, in a way, allows PepsiCo to compete with Coca-Cola at a better level. Imagine the scenario of a consumer buying a Coke and a packet of Lay’s potatoes.
Organizational structure: both are large yet efficient
When companies get too big, the risk is that they also get too slow in making a decision. However, for companies, like Coca-Cola and PepsiCo, which focus on the consumer markets, it is critical to have a lean decision-making process, where layers of management need to be avoided.
Indeed, where the two companies are too slow to adapt to consumer changing habits, this would kill the business model in the long run.
For instance, both Coca-Cola and PepsiCo, as more consumers perceive their products as unhealthy, they are focusing on diversifying their product portfolio to have more “healthy” choices.
ย PepsiCo’s change in portfolio compositionย
Distribution strategy: bothย Coca-Cola and PepsiCo distribution systems are their key advantage
One of Coca-Cola’s key ingredients is its distribution system of branded beverages available to consumers in more than 200 countries through a network of company-owned or controlled bottling and distribution operations, independent bottling partners, distributors, wholesalers, and retailers.
Coca-Cola has the world’s most extensive beverage distribution system.
Also, PepsiCo has a massive distribution system based on manufacturing and licensing agreements with several brands.
Both companies know how to tap into consumer habitsย
Demand creation is crucial for any company that wants to access consumer desires.
However, that requires massive marketing resources and campaigns to “enhance consumer awareness,” which means generating demands for their product portfolio.
Coca-Cola’s advertising expenses were $5.4 billion in fiscal 2025. PepsiCo’s advertising and other marketing activities totaled $5.4 billion in fiscal 2025, including $3.4 billion of advertising.
This process requires a rigorous brand positioning developed around consumer insights.
Coca-Cola franchise leadership
Coca-Cola bottling partners are a crucial ingredient in its success. Coca-Cola also designs business models in specific markets to have maximum penetration.
PepsiCo digital strategy
PepsiCo is putting a massive effort into a digital strategy to grow its brands. Some of those initiatives include, as reported in PepsiCo’s financial statements:
Frito-Lay North America is using Big Data to help make sure consumers can help find their favorite snacks in local stores
In India, PepsiCo set up a Digital Command Center to analyze links between consumer behavior and business results
In China, we leveraged social media to launch the latest โBring Happiness Homeโ Chinese New Year campaign, including a 20-minute video that generated more than 1 billion views.
Those are some examples of how PepsiCo is doubling down on those initiatives.
Who has the best business model?
In my opinion, and that is an aspect I like the most about any business model, I like the fact that PepsiCo has a well-diversified portfolio between beverage and food.
This allows the company to tap into larger consumer pieces of the market while successfully competing with Coca-Cola on a larger scale.
Where a consumer might prefer Coca-Cola beverages over PepsiCo, the company can still leverage its large snack portfolio to tap into the same market segments.
PepsiCo is swiftly moving toward “more healthy” choices and digitalization by leveraging organic businessgrowth.
Key Highlights
Revenue Comparison: In 2022, Coca-Cola generated over $43 billion in revenue, while PepsiCo’s revenue surpassed $86 billion.
Primary Operations: PepsiCo’s main operations are in the United States. Coca-Cola holds the title of the world’s largest beverage company.
Diversification: PepsiCo has diversified its business between beverages and food. In 2017, food represented 53% of its revenues. In contrast, Coca-Cola focuses solely on beverages.
Decision-Making Process: Despite their size, both companies maintain relatively quick decision-making processes, which are crucial for adapting to changing consumer habits and trends.
Distribution Strategies: Both Coca-Cola and PepsiCo have extensive distribution strategies, with a global network of operations, bottling partners, distributors, and retailers.
Consumer Habits and Adaptation: Both companies invest heavily in demand generation through marketing activities to align with and influence consumer habits.
Product Portfolio: Coca-Cola primarily focuses on beverages, while PepsiCo has a wide array of products ranging from food to beverages.
Organizational Structure: Both companies have efficient organizational structures that facilitate quick decision-making, critical for consumer-focused businesses.
Distribution Advantage: Both companies have robust distribution systems, with Coca-Cola having the world’s most extensive beverage distribution system.
Marketing and Demand Creation: Both Coca-Cola and PepsiCo invest substantial resources in marketing to create and enhance consumer awareness and demand.
Coca-Cola’s Franchise Leadership: Coca-Cola’s success is attributed to its bottling partners and specific market-focused business models.
PepsiCo’s Digital Strategy: PepsiCo is heavily invested in a digital strategy, leveraging initiatives like data analytics and social media campaigns to enhance its brand presence.
Diversification Advantage: The diversified portfolio of PepsiCo allows it to tap into broader consumer segments, competing effectively with Coca-Cola on multiple fronts.
Focus on Healthier Choices: Both companies are adapting to changing consumer preferences by incorporating more “healthy” options into their portfolios.
Conclusion: The differences in product offerings, diversification, distribution strategies, and marketing approaches highlight the distinct business models of Coca-Cola and PepsiCo. While both compete, they cater to different consumer needs, with PepsiCo’s diversification allowing it to tap into a broader market spectrum.
Coca-Cola follows a business strategy (implemented since 2006) where through its operating arm – the Bottling Investment Group – it invests initially in bottling partners operations. As they take off, Coca-Cola divests its equity stakes, and it establishes a franchising model, as long-term growth and distributionstrategy.
Coca-Cola’s largest disclosed shareholders are Warren Buffett’s Berkshire Hathaway, with 9.29% of shares as of 31 December 2025, The Vanguard Group (8.61%) and BlackRock (7.28%), according to the 2026 proxy statement.
Coca-Cola generated $45.75 billion in revenue in 2023, compared to over $43 billion in revenue in 2022, and $10.7 billion in profits in 2023, compared to over $9.5 billion in net profits in 2022.
Coca-Cola’s Purpose is to “refresh the world. make a difference.” Its vision and mission are to “craft the brands and choice of drinks that people love, to refresh them in body & spirit. And done in ways that create a more sustainable business and better-shared future that makes a difference in peopleโs lives, communities, and our planet.”
Coca-Cola is the market leader of the soft drink industry. However, Coca-Cola faces significant challenges with increasingly health-conscious consumers and less access to water resources.
The Coca-Cola Company is an American multinational beverage corporation founded in 1892 by pharmacist Asa Griggs Candler. Many consumers associate the company with its signature soda in a red can or bottle. In truth, however, The Coca-Cola Company owns a plethora of soft drink, juice, tea, coffee, and other beverage brands.
The company also sells its products in nearly every country in the world, with Cuba and North Korea the only two countries where it is not sold officially. Though these figures allow Coca-Cola to enjoy market dominance in many countries, the company is nevertheless subject to intense competition.
Pepsi is owned by PepsiCo, the holding company which owns many brands spanning from drinks to food & snacks and more. PepsiCo generated $91.47 billion in revenue in 2023, and $9.07 billion in profits for the same period. PepsiCo is primarily owned by institutional investors like The Vanguard Group (10.1%) and BlackRock (8.2%), as of 26 February 2026. Top individual investors comprise Robert Pohlad, the company’s board member; and the company’s CEO, Ramon Laguarta.
PepsiCo was founded in 1902 by American pharmacist and businessman Caleb Bradham as the Pepsi-Cola Company. Bradham, who hoped to emulate the success of Coca-Cola, marketed the beverage from his pharmacy and registered a patent for its recipe the following year.
In 1965, PepsiCo acquired Frito-Lay in what the chairmen of both companies called a โmarriage made in heavenโ. The resultant company transformed PepsiCo from a soft drink organization and set it on a path to becoming one of the worldโs leading food and beverage companies. Today, PepsiCo claims to operate in more than 200 countries and territories around the world with six reportable segments and many successful brands.
PepsiCo generated $91.47 billion in revenue in 2023, over $86 billion in revenue in 2022, over $79 billion in revenue in 2021, and over $70 billion in 2020.
PepsiCo generated $9.07 billion in profits in 2023, compared to nearly $9 billion in profits in 2022, over $7.6 billion in profits in 2021 and over $7 billion in 2020.
Gennaro Cuofano is a CRO and tech executive who has worked in AI since late 2015, starting with bringing NLP, natural-language generation, voice and chatbot products to the marketing industry. His background is in law and finance: he holds a Master's degree in Law and an International MBA with an emphasis on corporate finance (LUISS Business School and the University of San Diego, 2012), and worked as a financial analyst at a real-estate investment firm in San Diego and as an assistant controller. His work focuses on business model strategy, business engineering and, more broadly, structural analysis: how companies make money, read from their own filings. He created FourWeekMBA and leads research there and at The Business Engineer, his newsletter on AI and business strategy, with over 95,000 subscribers and more than 1,000 published analyses. His writing has also appeared on Entrepreneur (for example, How to Digitize a Family Business in Europe) and HackerNoon. Find him on LinkedIn and Substack. See how we source.
