New U.S. tariffs are impacting the cold drink companies, with the Coca-Cola Co. (NYSE:KO) ending up with a cost advantage over PepsiCo Inc. (NASDAQ:PEP).
The key factor behind the change is where each company manufactures the concentrate that forms the base of their sodas.
What Happened: PepsiCo manufactures almost all of its concentrate for U.S. sodas in Ireland, which is now subject to a 10% tariff.
Coca-Cola, by producing its concentrate largely in Atlanta and Puerto Rico, has managed to avoid this import duty. The Wall Street Journal reports that both companies also have to deal with a 25% tariff on imported aluminum, which has raised concerns about packaging costs.
See Also: Gary Black Shares Polymarket Data, Says Trump Tariffs Have Pushed Odds Of 2025 Recession To 57%
Why It Matters: Pepsi's decision to base concentrate production in Ireland for tax benefits has landed it with an unexpected disadvantage.
As the trade war continues, production geography is becoming a central factor in business strategy. With its domestic operations, Coca-Cola is better positioned to tackle the impact, while PepsiCo faces new challenges in an already competitive market.
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