Wide-Moat-Rated Coca-Cola and PepsiCo Taking Inflation in Stride, but Shares Look a Bit Expensive

With leading brands and stout cost advantages, we’ve long believed that Coca-Cola (the dominant player in the carbonated soft drink—CSD—space, with nearly 21% value share per Euromonitor) and PepsiCo (the top operator in global savory snacks, with nearly 22% value share, and the second-largest player in the CSD market with 10% share) have carved out wide economic moats. From our vantage point, this edge has manifest in pricing power and negotiating leverage with suppliers, which we think will persist and prove particularly valuable as inflationary headwinds show no signs of diminishing.