Coca-Cola's Concentrate Model Fuels Five-Year Return Dominance

Coca-Cola and PepsiCo have been competing in the grocery aisle for decades, but their five-year stock charts reveal vastly different outcomes.

While Coca-Cola has seen a significant increase of +84.09% over the past five years, PepsiCo's performance has been more subdued at +3.08%. This disparity can be attributed to the two companies' distinct business models.

Coca-Cola sells concentrate, which allows bottlers to handle the capital-intensive aspects of production, resulting in a gross margin of 61.6% and an operating margin of 28.7%. In contrast, Pepsi's combined snacks and beverages operation incurs higher costs due to trucks, plants, and chip lines, leading to a lower gross margin of 54.1% and operating margin of 14.4%.

Despite this structural difference, PepsiCo has managed to maintain its dividend payments for 54 consecutive years, with a 4% hike beginning in June 2026. However, the company's snack segment faces challenges, particularly in Frito-Lay North America, where affordability packs and brand restaging are crucial for recovery.

For retirement-focused investors, Coca-Cola appears to be a more stable choice due to its concentrate model, expanding operating margin, and raised guidance. However, PepsiCo may still offer opportunities if it can stabilize its snack segment and pricing power.