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Coke and Pepsi stocks are both struggling — but one beverage giant has more to worry about than the other

Coca-Cola Co. and Pepsi Co. soda machines stand in a shopping center parking lot in Jasper, Indiana.

Luke Sharrett | Bloomberg | Getty Images

Coca-Cola and PepsiCo‘s rivalry spans decades, but Coke usually comes out on top.

This quarter was no different.

The beverage leaders’ stocks have struggled this year, hurt by higher interest rates and investor concerns about the possible negative impact of weight loss drugs like Wegovy. (Coke’s $242 billion market cap beats Pepsi’s by roughly $20 billion.)

Even so, both companies topped Wall Street’s estimates for their third-quarter results and raised their full-year forecasts. Strong demand for Coke products drove the Atlanta-based company to raise its forecast, while Pepsi’s cost-management improvements have bolstered its full-year outlook for earnings.

But only Coke managed to report volume growth. The metric, which strips out the effects of pricing and currency, has become more critical to investors in recent quarters as food and beverage companies pause the price hikes that drove sales growth last year. Those same increases have also alienated some shoppers who are trying to save money on their grocery bills.

Coke’s overall volume rose 2% in the third quarter, while Pepsi reported flat beverage volume and a 1.5% decline in its food volume. In North America, the differences between the two businesses were even more stark. Coke reported flat volume, while Pepsi’s North American beverage unit saw volume fall 6%.

Coke also raised both its top- and bottom-line outlook for the full year, while rival Pepsi only upped its forecast for its full-year earnings, signaling the better outlook might not be due to higher demand for its products.

Here’s a rundown of the five key factors that helped Coke edge out Pepsi:

Pricing strategy

Coke started raising prices across its portfolio in the spring of 2021. PepsiCo followed its lead, starting its own price hikes that summer.

More than two years later, both companies reported that higher prices have boosted sales. Pepsi paused price hikes earlier this year but plans a “modest” increase next year. Coke took longer to pause its higher prices, but CEO James Quincey said in July the company is done raising them for now in the United States and Europe.

Because of the timing of their price increases, Coke’s North American drink prices were up only 5% this quarter, compared with Pepsi’s increase of 12%.

“The higher the price increase, you would expect a bigger drag on volume,” Edward Jones analyst Brittany Quatrochi said.

Better brands

Away-from-home business

International strength

Franchising its bottling

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