With the North American soft drink market saturated, both Coke and Pepsi are focusing now on other areas to grow their businesses. Coke is targeting international growth; Pepsi is growing its snack business. And both are going head-to-head in the rapidly expanding bottled-water business.
advertisement
But when it comes to the soft drink wars, it is still very much a country divided between two familiar colors: Red and blue.
"In the U.S., it's a closer race between Coke and Pepsi,” said Bonnie Herzog, an industry analyst with Smith Barney. “When you look outside the U.S., I think Coke has the lead."
Indeed, 75 percent of Coke's profits now come from the foreign markets it dominates. While back home, the slugfest has gone on for decades.
Gerald Herbert / AP file Manufacturers sold more than $7.7 billion worth of bottled water last year, up 12.3 percent from 2001, according to the Beverage Marketing Corp. Pepsi's Aquafina brand is beating Coke's Dasani in the bottled water category.
With public opinion split, there's another problem for both Coke and Pepsi. Volumes of carbonated soft drinks in North America are growing at less than 1 percent a year. Meanwhile, sports drinks like Gatoraid are growing at 15 percent a year. And bottled water is expanding by 26 permanent annually.
In a saturated soft drink market, water is where the growth and money are, according to Herzog. For now, Pepsi's Aquafina is beating Coke's Dasani in the water wars.
It's just the latest front in a battle between hundreds of Coke and Pepsi brands: Diet Coke vs. Diet Pepsi; Sprite vs, Mountain Dew; Nestea vs. Lipton, Tropicana vs. Minutemaid. And the list goes on.
But for Pepsi - it's not all about drinks. Some 60 percent of its profits come from its snack business. From Fritos to Lays to Cracker Jacks and Tostitos, Pepsi has a virtual monopoly, with no competition from Coke.
"They're going after the younger consumer who purchases a single-serve product, at a convenience store like 7-11,” said Todd Stender, who follows the companies at Crowell Weedon & Co. ”And that's really where the profits are."
Coke, meanwhile, just scored a big coup by winning the soft-drink business at Subway, a fast-food chain now bigger than McDonald's, that had previously served only Pepsi.
In the home office, analysts like both management teams. Both companies expense stock options, and both project revenue growth in the mid-to-high single digits.
© 2004 MSNBC Interactive
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.