Pepsi market value overtakes Coke for first time in over 100 years
13th December 2005
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Pepsi overtook Coke in terms of market capitalization for the first time in 112 years on Monday, with investor preference reflecting Pepsi's successful diversification into the non-carbonated healthful beverage and snack sectors.
PepsiCo closed at $59.31 to give it a market capitalization of $98.4 billion, compared to Coca-Cola which closed at $41.15, valuing its share at $97.9 billion. The shift is a strong indication of investor confidence in PepsiCo, which has diversified into snacks and non-carbonated drinks during the last few years. Coca-Cola still relies heavily on its carbonated soft drinks, a category that is losing favor with many consumers as public awareness of health matters increases.
Both companies are set to see a decline in soft drink sales for the first time this year in North America, but while Coke derives 82% of its revenue from carbonated beverages, Pepsi only generates 20% of its revenue from soda. PepsiCo also produces Gatorade sports drinks, Tropicana juices and Frito-Lay snacks.
Coca-Cola is attempting to revive its flagship brand with a new marketing campaign with the slogan "Welcome to the Coke side of life" and the launch of new varieties including a new coffee flavored cola.
Market analysts Datamonitor predict that that the carbonated drinks market will experience slower growth than that of the juice sector over the next five years.
PepsiCo Inc. is in line to get its first female chief executive before the end of the year. Steven S. Reinemund, chairman and CEO of the U.S. soft drink and snack food giant, announced his retirement via press release effective in May, 2007. Reinemund, 58, said he was leaving to spend more time with his family.

The same PepsiCo release confirmed that Indra Nooyi, currently president and CFO, will take over for Reinemund. Nooyi's current position will be split in two. The first is scheduled to be filled by Richard Goodman, 57, currently CFO of PepsiCo International, who will become CFO. Hugh Johnston, 44, currently senior vice president of transformation, was promoted to the newly created post of executive vice president of operations, procurement and information technology.

Nooyi, 50, is a Yale-educated daughter of a middle class Indian family, according to her official biography. She is scheduled to succeed Reinemund, in October, the company said. Reinemund reportedly will stay with PepsiCo until May, 2007. Together, Nooyi and Reinemund have guided PepsiCo through several large take-overs and has seen the company overtake The Coca-Cola Company both in terms of sales and market value. 

Coca-Cola is still the No. 1 soft drink maker based on U.S. and global market share. A significant portion of PepsiCo's sales revenue comes from non-drink brands in its Frito-Lay and Quaker Oats product lines.

Some on Wall Street were surprised by Reinemund's retirement announcement, according to news reports. Monday, the  stock (ticker:PEP) closed up $0.62 at $63.95 per share on the NYSE.