This always brings up the unavoidable question - Pepsi or Coke? 😄
You are correct that the moat is in the brand. I think if you were to repackage both of Pepsi's and Coke's products into "generic" unlabeled containers and let only taste and price affect consumer's decisions then we would see a completely different shakedown of preferred products. Brand name recognition is definitely built on reputation but it also has a strong emotional component. A very prominent example of the emotional component can be see in the automotive sector. Who in the US hasn't heard of the Ford vs. Chevy vs Dodge banter? Oddly enough, nobody adds Toyota, Nissan, or Honda into that mix. Did the Japanese automakers dodge a bullet there?
I don't necessarily understand the emotional component of a brand but I recognize other people's emotions and try to play off of that. To that end, I would go to my local Walmart and Smith's (Kroger on the west coast) and watch what people put into their shopping carts. Pepsi or Coke? Starry or Sprite? Or maybe the generic store brand? Without any scientific rigor, I think the split was 40/40/10/10 between Coke drinks, Pepsi drinks, store brand generics, and everything else like Dr. Pepper and the like. I couldn't see deep enough inside the cart to check out the chips and snacks. 😏 I understand Coke and Pepsi both raised their prices but people still buy the products. I saw pricing power in action.
That said, I think both Coke and Pepsi are wonderful companies that are durable, well run, and offer great products for those into them. Some people may avoid the companies because they believe the products are unhealthy. It come as surprise to some but Coke and Pepsi have the muscle and resources to reformulate their drinks and snacks to reduce sugar and salt content while retaining most, if not all, the original taste. For example, when picking a cola, I will pick Zero-Sugar, Zero-Caffeine Coca Cola. It's readily available and tastes good for me.
For me to get into either Pepsi or Coke will require a COVID-crash price level. The dividend must be at least 4%. There are so many high quality companies that can exceed 4% and grow it. There are income oriented CEFs and ETFs like CHI and HIPS. Consider BDCs like Capital Southwest and Hercules Capital.
This always brings up the unavoidable question - Pepsi or Coke? 😄
You are correct that the moat is in the brand. I think if you were to repackage both of Pepsi's and Coke's products into "generic" unlabeled containers and let only taste and price affect consumer's decisions then we would see a completely different shakedown of preferred products. Brand name recognition is definitely built on reputation but it also has a strong emotional component. A very prominent example of the emotional component can be see in the automotive sector. Who in the US hasn't heard of the Ford vs. Chevy vs Dodge banter? Oddly enough, nobody adds Toyota, Nissan, or Honda into that mix. Did the Japanese automakers dodge a bullet there?
I don't necessarily understand the emotional component of a brand but I recognize other people's emotions and try to play off of that. To that end, I would go to my local Walmart and Smith's (Kroger on the west coast) and watch what people put into their shopping carts. Pepsi or Coke? Starry or Sprite? Or maybe the generic store brand? Without any scientific rigor, I think the split was 40/40/10/10 between Coke drinks, Pepsi drinks, store brand generics, and everything else like Dr. Pepper and the like. I couldn't see deep enough inside the cart to check out the chips and snacks. 😏 I understand Coke and Pepsi both raised their prices but people still buy the products. I saw pricing power in action.
That said, I think both Coke and Pepsi are wonderful companies that are durable, well run, and offer great products for those into them. Some people may avoid the companies because they believe the products are unhealthy. It come as surprise to some but Coke and Pepsi have the muscle and resources to reformulate their drinks and snacks to reduce sugar and salt content while retaining most, if not all, the original taste. For example, when picking a cola, I will pick Zero-Sugar, Zero-Caffeine Coca Cola. It's readily available and tastes good for me.
For me to get into either Pepsi or Coke will require a COVID-crash price level. The dividend must be at least 4%. There are so many high quality companies that can exceed 4% and grow it. There are income oriented CEFs and ETFs like CHI and HIPS. Consider BDCs like Capital Southwest and Hercules Capital.
There is a large difference between dividend growth investing and high yield dividend stocks. :)