In a shocking display of Dow Jones Industrial Average cronyism, fast-food titan McDonald's Corporation (NYSE: MCD) recently announced that it will stop test sales of soft drinks made by PepsiCo Inc. (NYSE: PEP). The decision means that Coca-Cola Company (NYSE: KO) products will retain their title as the preferred beverage line of the Golden Arches.
The announcement by Mickey D's ends an experiment where the fast-food chain offered bottled Pepsi beverages, including Mountain Dew, Gatorade, and Lipton tea, to consumers in several test markets. After the apparently underwhelming response from McDonald's clientele, Pepsi spokesman Larry Jabbonsky chalked up the experience to "a great opportunity and a great learning experience."
By my count, this is the second crushing moral loss for Pepsi during the last week. Time's Michael Scherer dealt the first blow when he reported on Friday that the Obama administration prefers Coke products to their Pepsi counterparts. In fact, when Scherer quizzed a White House official as to whether the administration truly preferred Coke, the staffer responded, "Don't most Americans?" Ouch.
However, one arena where Pepsi can enjoy equal footing with Coke is on the charts. Shares of both beverage companies have recently broken below long-term support -- in the 40-to-42 region for KO, and in the 50 neighborhood for PEP. For these perennially warring soda stocks, it looks like recessionary pressures are the great equalizer.
In fact, the outlier here is none other than McDonald's. Despite the Dow's bleak performance in 2009, shares of the burger baron are still holding steady atop long-term support from their 40-month moving average.
Elizabeth Harrow is an analyst and financial writer in the research department at Schaeffer's Investment Research. She is featured in the video series Schaeffer's Daily Q&A on SchaeffersResearch.com.











Reader Comments (Page 1 of 4)
3-02-2009 @ 3:40PM
Paul said...
That was a close call! If McDonalds switched to Pepsi, I'd have taken all my fast food business to the competition. Too bad the mob has such influence over which brand sodas are sold at restaurants. Unless you want your knees busted, you buy from who they tell you to!
5-30-2009 @ 9:17PM
fivestarfoodservicesux said...
Pepsi products suck !!!!!
3-02-2009 @ 4:50PM
Shannan said...
Pepsi is far superior 2 coke. Of course coke won tho cause fountain drinks tase better than from the bottle so if they only offered bottled Pepsi (and they proly didn't keep it cold enough anyways) then of course people r gonna want the fountian coke. Only problem I have with Pepsi is they got rid of Tropical Chill Pepsi, Vanilla Pepsi and Crystal Pepsi. I loved those flavors.
3-03-2009 @ 9:20AM
Julie said...
pepsi will always suck
3-03-2009 @ 8:08PM
Ron said...
If they truly replaced Coke with Pepsi at those locations, I believe results would have been way better. Who wants a bottled soda when they can get a fountain one? Also, the article never stated if the customers could get the Pepsi as part of the combos, or whether they were limited to fountain (only Coke products) and McDonalds tried to upsell to the Pepsi. Not at all saying this is what they did, but they didn't say they didn't.
3-03-2009 @ 8:17PM
jeb said...
Pepsi blew it with the Pepsi Challenge back in the 80's - 90's...I took it half a dozen times & picked COKE everytime...Don't buy Pepsi to this day and if a place only sells Pepsi I get a water!!!!
3-03-2009 @ 8:23PM
JS said...
This was not a reasonable comparison between the two. Not just my opinion...Pepsi is favored over Coke and it proves it whenever there is a straight up taste competition.
3-03-2009 @ 8:23PM
Heather said...
The main reason I don't got to McDonald's is b/c they sell coke products. At least most other fast food place have Dr. Pepper. If I do get stuck eating there, I always get ice tea.
All of Pepsi's products taste better then Coke's.
3-03-2009 @ 8:31PM
chriskulbeda said...
Pepsi is second worst only to RC products. Coke by far has been and always will remain the finest cola beverage.
3-03-2009 @ 8:41PM
Scott said...
B______T!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! Why would you want a bottled anything over any fountain drink,,,,,even coke. Bad example of coke being the bad loser.
3-03-2009 @ 8:44PM
Kevin said...
McD's and Coke have always worked on a simple handshake deal. no contract. but as long as people favor Coke (and they always will!), McD's will always have Coke products. that's why Subway switched from Pepsi to Coke.
3-04-2009 @ 2:43AM
Torrin said...
its all about the jones soda
3-03-2009 @ 8:48PM
craigmed said...
Thank GOD!!!!!!!!!!!!!
3-03-2009 @ 8:56PM
Tim F said...
Coke... UGH
Pepsi... Good
3-03-2009 @ 8:58PM
Larry Cover said...
I have a friend that owns 9 McDonald fast food places in southern Cal and I told him that I will never order any drink except for
ice tea at a McDonald's. I hate Coke and always have. See how long Coke lasts !!
3-03-2009 @ 9:07PM
eaglesnest536 said...
I don't know if anyone else has ever noticed but a flat coke taste just like pepsi. coke is by far the better cola....and by the way, what is up with people that prefer fountain drinks over bottled. The bottle is fresher and fountain drinks are watered down...shaking my head......
3-03-2009 @ 9:18PM
gbsmitty said...
One of the few things that gets me into McDonalds is the Coke. The other fast foods are moving to Pepsi. I avoid Taco Bell (and I like tacos) just due to their drinks. One thing else, looking at some of the posts...Coke drinkers seem able to spell. Something in the Pepsi I bet.
3-03-2009 @ 9:20PM
cokegal210 said...
Coke is KING. Pepsi sucks. Never will be able to out come out on top. Good for McDonald's.
3-03-2009 @ 9:28PM
Jenn said...
COKE SUCKS!!!!! Of course Obama would like coke. I don't call it choke-a-cola for nothing. Coke is far too sweet and smells awful. I don't buy food at places that sell Coke, and McDonald's sucks anyway. McDonald's is the TACKIEST establishment in the world. Over commercialized and they have the worst commercials ever. PEPSI RULES!!!!
3-03-2009 @ 9:26PM
debbie said...
Coke always wins in our house but in these times who ever has lowest price wins these days. And if we are eating out and coke is not a choice then fresh ice tea always.