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America’s soda industry is dominated by two companies, Coca-Cola (KO ) and PepsiCo (PEP ). These two beverage giants have battled each other for decades, but now the fight has gone global. This is mostly out of necessity – health-conscious consumers in developed markets, like the U.S., are drinking less soda than ever before. In fact, soda consumption here in the U.S. has fallen each year for more than a decade. In response, both are aggressively investing in new geographic markets, where consumption of soda remains on the rise.

But PepsiCo is even taking it one step further by building a large food business, which Coca-Cola hasn’t done. For many years, PepsiCo steadily expanded its food brands and it now has a roughly even split between its annual food and beverage revenue. This is a distinct advantage PepsiCo has over Coca-Cola, and it explains why PepsiCo has outperformed its bitter rival in recent years. In the past five years, PepsiCo stock gained 70%, while Coca-Cola returned just 25% in the same time.

Going forward, investors should expect PepsiCo to continue delivering strong share price gains and dividends, based on its likely earnings growth and attractive valuation.

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