Can Pepsi pull away from Coke?

While the former looks to expand its snack and soda exposure, the latter struggles to stabilize management.

By Jim Cramer Dec 13, 2013 12:38PM

Cans of Pepsi © David Paul Morris/Bloomberg via Getty ImagesIs a stable PepsiCo (PEP) pulling away from a chaotic Coca-Cola (KO)?

 

One has to wonder after the two pieces of news that came out yesterday about the companies. In the morning we learned that one of the fastest growing restaurant chains. Buffalo Wild Wings (BWLD), is ripping out Coke and putting in Pepsi along with working directly with PepsiCo subsidiary, Frito-Lay, to develop custom-designed product.

 

Also, Coca-Cola announced a management shuffle that included the departure of Steve Cahillane, head of the Americas division for the company, who is leaving just eleven months after he took the job. Coke is an insular place these days, so we can't be sure, but there had been a lot of talk that Cahillane might take over the reins when Muhtar Kent retires.

 

Cahillane was helping to pave the way for the refranchising of bottlers, one of those financial engineering things that Coca-Cola is doing that doesn't attack at all the core issue -- namely, people are drinking less and less soda, both regular and diet. Both are dying categories, the first because of obesity and diabetes and the second because, well, who knows what, but if you go to the doctor, s/he will tell you not to drink diet sodas. Doctors want you to drink water, and Coca-Cola has a water business. But it is hardly as lucrative as soda. The Street on MSN Money

 

Now, PepsiCo faces the same challenges and its deal with Buffalo Wild Wings shows how it can leverage that snack-soda duality that Nelson Peltz has questioned.

 

I am a huge believer in Indra Nooyi, have been for years, and she believes both companies should be under the same roof. Smart CEO.

 

I'm with her. She is one of my Bankable 21, the 21 CEOs I salute in Get Rich Carefully that comes out at the end of the month.

 

Yesterday we saw the intelligence of keeping the two companies together. Maybe soda comes back one day. But in the meantime, like all no-growth to declining categories, it's a market share game.

 

Consider this a moment: PepsiCo is flexing its muscles. Coca-Cola? It's gone flat. Jim Cramer on MSN Money

 

At the time of publication, Action Alerts PLUS, which Cramer co-manages as a charitable trust, had no positions in the stocks mentioned.

 

Jim Cramer's Action Alerts Plus: Check out this charitable trust portfolio and uncover the stocks Cramer thinks could be winners.

 

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96Comments
Dec 13, 2013 1:33PM
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Used to be that Coke gave restaurants a better deal than Pepsi, which is why more of them carried Coke.  Don't know if that's the case anymore.  In the cola wars, people are pretty much brand loyal for life, for the most part.  Not sure if that applies to all these vitamin waters, energy drinks, juice drinks, etc...

Anyone seen these Coke "drink mix" machines?  They are in 5 Guys Burgers and a few other restaurants we frequent.  You can pick from just about every soda Coke makes and then have flavorings added to it, all from the same self-service machine.  Me personally - I like the cherry vanilla Coke Zero.  Haven't seen any of these machines from Pepsi.
Dec 13, 2013 3:32PM
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HMM - Buffalo Wild Wings - is that the same chain that used to be called BW3 and almost went bankrupt? Cramer makes it sound like it is the hottest new eatery -- ha!  Looks like Cramer has been eating a few of the test products, boneless wings wrapped in Ruffles Buns. There are only a few concepts that can use doritos in their dishes...Coke dominates International - which is where the growth is.  "Ripped" out the Coke machines?  journalism to manipulate the market.
Dec 13, 2013 1:31PM
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I have never heard someone I know say "I don't go there because they don't have Pepsi". Nuff said.
Dec 13, 2013 3:34PM
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Dr. Pepper is better than both of these.
Dec 13, 2013 5:07PM
Dec 13, 2013 2:40PM
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Well let’s see, when an independent Cocoa-Cola tried to buy Gatorade in an expansion effort over a decade ago Warren shot it down, fired everybody, and put in a puppet management team. That crack staff has lost control of the message, the market and the manufacturing. But the margins are good, the management is cheap and under control (no real competition to rock any balance sheets) and the message- well the message is don’t cross Warren. Your place in Berkshire is to make margins not markets, just milk the cash cow ‘till she drops, we’ll take care of the dead meat in Omaha.

Dec 13, 2013 3:46PM
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You can get a better drink at a lemonade stand run by an eight year old kid. Sugary drinks are extremely unhealthful. I can't believe either is worth a nickle.
Dec 13, 2013 5:14PM
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Well folks Little Beaver says the Santa Claus rally starts on Monday. I hope you loaded up.
Dec 13, 2013 3:58PM
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... is this another' sucker's rally .. 2 days in succession .!!!
Dec 13, 2013 2:57PM
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If we didn't have Coke, Pepsi and Beer ads....We would not have a Super Bowl.
Dec 13, 2013 3:37PM
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I ride a motorcycle, a Honda Rebel.

 

I just signed a contract for Boeing to build the 777X in my back yard.  No more mowing the lawn!

 

 

Dec 13, 2013 3:11PM
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Never forget one day when we were kids and put money in a coke machine and beer came out... we just  kept pumping money in and the guy at the service station came out and had a good laugh as he took our suds away........... LOL
Dec 13, 2013 4:41PM
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Any know which company has the largest fleet of vehicles???????
Coca-Cola
Was a trivial pursuit question, was a few years ago, not sure if it remains true.
Coke and Pepsi have battled back and forth for decades, Coke has remained on top and I don't see this deal changing that.  Of course dorrito flavored wings sound tempting, as would buffalo wild wing flavored dorritos.....  Pepsi owns Dorritos by the way.
The best ginger ale on Earth is Canada dry, think coke makes it.

Dec 13, 2013 3:38PM
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No reason for markets falling  ... posters on this site say it is OK ... it is normal ...
Dec 13, 2013 3:07PM
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The market manipulation has begun ... no reason for markets falling  ... posters on this site say it is OK ...  so relax,
Dec 13, 2013 2:21PM
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And if you want to tell someone you just don't care ...give them cramers new book for christmas ....

:)
Dec 15, 2013 11:05PM
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High on drugs Rush Limpballs and his mentally challenged Repukelican followers are calling the Pope a Marxist, based on the Popes views of trickle-down voodoo economics.

And let's not forget about **** Cheney sticking to his guns by still calling Nelson Mandela a terrorist. Cheney was last heard ranting and raving: "LONG LIVE APARTHEID",  "KILL ALL THEM DARKIES" and "KILL ALL THOSE GAYS AND LESBIANS..... ummm..... except for my daughter".

Forgive all them Repukelican lunatics Lord, for they all suffer from "Affuenza".

DIE REPUKELICANS, DIE!


P.S. PEPSI RULES LIKE DEMOCRATS! COKE SUCKS LIKE REPUBLICANS!
Dec 13, 2013 1:43PM
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I'm here with rest of the sheeple...Not much happening today...

BTW...We or Miss Lilly is a Coca-Cola addict...So I will not enter discussion.

Although we do have 7 full bottles of the old, old recipe; And one empty, plus the carton..

That was before the decided to bring it back, about 30 years ago or thereabouts ?


I will drink both (P/C) or either with whiskey, don't make much difference after 4-5 cocktails.

Dec 13, 2013 5:20PM
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I guess if you compare us to the World's population...We might be the 1-2%'ers..

At least most on this blog...

Maybe we don't realize it, but should be thankful for it....

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