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Same industry, different business

Coca-Cola and PepsiCo both sell soda. Both are big US companies that sell drinks around the world. But in FY2025, Coca-Cola kept $25.3 of every $100 that came in. PepsiCo kept $8.8. Your job is to explain why.

For learning only. Cityfort is not a registered investment adviser or broker-dealer and does not recommend buying or selling any security. Prices shown are dated and may be out of date.

What to do

  1. Ground rule: In this lesson, we explain differences. We don't rank the companies or judge them as investments.
  2. Step 1: Look at the two receipts
  3. Step 2: Read what each company says about itself
  4. Step 3: Sort the differences
  5. Step 4: Talk it through
  6. Step 5: Exit ticket

Step 1: Look at the two receipts

A receipt shows where each $100 a company took in went. "Kept as net income" is what was left after every cost and tax.

Lines are rounded to the nearest 10 cents, so a total may differ from $100 by a few cents. Words in quotes are the line names in each company's 10-K income statement.

Coca-Cola's FY2025 ended Dec 31, 2025. PepsiCo's ended Dec 27, 2025, because its year ends on the last Saturday of December.

  • Making the products (Coca-Cola: "cost of goods sold"; PepsiCo: "cost of sales"): Coca-Cola: $35.5; PepsiCo: $45.9
  • Selling, general and administrative (selling, delivery, offices, staff): Coca-Cola: $28.0; PepsiCo: $39.8
  • Other charges (Coca-Cola: "other operating charges"; PepsiCo: "impairment of intangible assets", mostly brand write-downs): Coca-Cola: $2.4; PepsiCo: $2.1
  • Interest (Coca-Cola: "interest expense"; PepsiCo: "net interest expense and other" plus "other pension and retiree medical benefits"): Coca-Cola: $3.2; PepsiCo: $1.3
  • Income tax: Coca-Cola: $5.5; PepsiCo: $2.1
  • Partners' share (part-owners of some units): Coca-Cola: $0.1; PepsiCo: $0.1
  • Kept as net income: Coca-Cola: $25.3; PepsiCo: $8.8

Step 2: Read what each company says about itself

US public companies file a Form 10-K with the SEC each year. Item 1 of the 10-K describes the business.

Coca-Cola

  • Its 10-K says: "Generally, finished product operations generate higher net operating revenues but lower gross profit margins than concentrate operations." (Form 10-K FY2025, Item 1, page 4)
  • What that means: "concentrate" is the flavor base for a drink. Coca-Cola mostly sells concentrate and syrups to bottling partners. The bottlers add water and sweeteners, package the drinks and sell them to stores. (Item 1, pages 3–4)
  • Fact card: in FY2025, concentrate sales were 59% of Coca-Cola's revenue. Finished drinks, mostly from bottlers Coca-Cola owns, were 41%. (Item 7, page 37; Item 1, page 4)
  • Fact card: Coca-Cola had about 65,900 employees at the end of 2025. (Item 1, page 10)

PepsiCo

  • Its 10-K says: "PBNA operates its own bottling plants and distribution facilities and sells branded finished goods directly to independent distributors and retailers." (Form 10-K FY2025, Item 1, page 3). PBNA means PepsiCo Beverages North America, its drinks unit in the US and Canada.
  • What that means: PepsiCo makes snacks, such as Lay's and Doritos, and finished drinks. It also sells concentrate to bottlers in some markets. PepsiCo, its bottlers and its distributors deliver many products straight to stores. (Item 1, pages 2–4)
  • Fact card: in FY2025, snacks and other foods were 58% of PepsiCo's net revenue. Drinks were 42%. Drinks from bottlers PepsiCo owns were 36%. (Note 1, page 67)
  • Fact card: PepsiCo had about 306,000 employees at the end of FY2025. (Item 1, page 10)

Step 3: Sort the differences

Draw a Venn diagram with two circles: Coca-Cola and PepsiCo. Put things both companies share in the middle.

Use two kinds of items:

  • Receipt lines: Which lines are close? Which are far apart?
  • Business choices: What does each company make? Who does the bottling and delivery? Which customers pay it?

Word bank

Revenue:
the money a company takes in from selling things.
Net income:
what is left after all costs and taxes. Also called profit.
Concentrate:
the flavor base a bottler mixes with water and sweetener to make a drink.
Bottler:
a company that makes, packages and delivers finished drinks.
Write-down:
a charge that lowers the value of something on the books, such as a brand. No cash is paid out for it in that year.
Form 10-K:
the yearly report a US public company files with the SEC.

Sentence starters

  • "___ spends more of each $100 on ___ because its business ___."
  • "The 10-K says ___ (Item ___, page ___)."
  • "These two lines are close: ___. So they don't explain the gap."

Data from Coca-Cola's FY2025 Form 10-K, filed Feb 20, 2026; PepsiCo's FY2025 Form 10-K, filed Feb 3, 2026; McDonald's FY2025 Form 10-K, filed Feb 24, 2026; Chipotle's FY2025 Form 10-K, filed Feb 4, 2026; Chipotle's Q3 FY2026 Form 10-Q, filed Oct 29, 2026; Costco's FY2026 Form 10-K, filed Oct 7, 2026; and Walmart's FY2026 Form 10-K, filed Mar 13, 2026. Checked Nov 7, 2026. Optional further reading: the lesson page.