Coke, Pepsi Become the Ultimate Commodities

Stock quotes in this article: KO , PEP , WFMI , DPS  

ATLANTA (TheStreet) -- Ask for a Coke in a restaurant, and half the time you get a familiar question from the waiter: "Is Pepsi OK?"

As if the two sweet, caffeinated, caramel-colored and carbonated products from Pepsi(PEP) and Coca-Cola(KO) were so dissimilar that the difference could cause customers to change their orders or storm out in disgust.

The answer invariably will come back to the waiter in the affirmative, since both beverages fulfill Americans' insatiable desire for the sweet stuff. The interchangeability of the two, while both rack up billions in sales, is an illuminating window to the demand for these cheap and calorie-rich products.

Pepsi and Coca-Cola don't make healthy food, yet their balance sheets have remained strong during the economic downturn. While other companies may produce food that's better for you, their stocks have been on a roller coaster. Junk-food brands have parlayed their cheap and addictive foods into success.

As families pare expenses during the recession, certain day-to-day luxuries are the first to go. People who may have shopped at Whole Foods(WFMI) or some other equally expensive organic retailer in search of food that's free from the dreaded high-fructose corn syrup menace plaguing America may be venturing back into the traditional grocery store looking to stretch their food budget.

Companies like Pepsi, Coke and Dr Pepper Snapple(DPS) have higher marking costs than beverages featured in Whole Foods. However, their ingredients are so much cheaper, a satisfactory margin can be earned at a fraction of the price. Ingredients like the aforementioned high-fructose corn syrup enable those companies to sweeten their products without the costly use of real sugar or other similar ingredients.

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