Few companies can boast the slow-and-steady growth track record of The Coca-Cola Company (NYSE:KO) and PepsiCo, Inc. (NASDAQ:PEP) in recent decades.
Both companies are shining examples of how specific commodities can be dominated through marketing and branding over long periods of time, creating wide moats in an industry many may think would otherwise be off-limits for long-term investors concerned about durable competitive advantages.
This past month, Pepsi made a move to attempt to enlarge its competitive advantage by buying home-soda machine maker SodaStream International Ltd. for $3.2 billion U.S. This deal is expected to provide real legitimacy to a sub-sector of the carbonated beverage market which has largely been overlooked by analysts and investors considering the big picture.
While $3.2 billion may seem like a large sum of money, for PepsiCo, it appears this investment may be more symbolic than economic. The company is competing in a highly competitive and cut-throat space, making finding a real tangible long-term advantage hard to come by.
The Israeli company provides everything one needs to make their own soda, much like a personal espresso machine, opening up the potential for Pepsi to introduce new products right into the kitchens of millions of retail consumers on an every day basis.
This acquisition stands to entrench Pepsi in the retail business channel, furthering the company’s effort to appeal to every day users of its product. While headwinds remain, Pepsi appears to be one company which is looking for avenues for growth, making this one company which will remain on my radar for some time.
Invest wisely, my friends.
Related Stories
