Everyone who drinks soda has had the following exchange.
“I’ll have a Coke.”
“Is Pepsi okay?”
The restaurant knows it isn’t. Pepsi and Coke are not interchangeable, and the reality is that most people prefer Coca-Cola products.
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Sprite, for example, is the dominant lemon-lime soda. PepsiCo (PEP) has a rival for it, Starry, a brand no person has ever intentionally ordered.
Sales numbers back this up. In 2024, Coca-Cola was the most popular soda sold in the United States. That was followed by Dr. Pepper and Sprite.
Pepsi came in fourth, and you have to assume that a lot of those sales were people who ordered a Coke and were forced to accept the substitute.
Diet Coke only fell slightly behind Pepsi, with the much-superior Coke Zero coming in seventh just below Mountain Dew.
Pepsi, of course, has its fans, in the same way that some people thought the Monkees were better than the Beatles.
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Still, while people will never fully agree on which cola is better, Coke has a large enough fanbase that when a business opts to serve Pepsi, customers wonder how much the brand paid for that access.
Coca-Cola, however, has recently made some major inroads. It’s about to replace Pepsi as the official soda of Carnival, and it has finally made a major move at Costco.
Costco’s food court welcomes Coca-Cola
Given Costco’s mission to save money for members, you might expect the chain to make some odd choices. If its food court offered Polar soda or some other off brand, that might have been sold to members as quirky.
The warehouse club could also have made an effort to sell its food-court concession to some up-and-coming brand. Members might have enjoyed seeing Jones Soda or some other brand looking to make a mark at the warehouse club’s popular food court.
Instead, Costco, for the past many years, has offered Pepsi at its food court. That meant that anyone ordering its famed $1.50 hot dog deal had no choice but to accept Pepsi along with their meal.
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Costco, however, made the choice earlier this year to end its deal with PepsiCo and replace Pepsi with Coke. That was a move many members were excited about, and the change has finally happened.
It may take a little longer for your Costco to replace Pepsi with Coke, but the change is coming, and it has actually happened at most of the chain’s warehouse club locations.
Costco is still an in-person business
While Costco has invested in its digital operations, its food court and other in-store offerings remain incredibly important because most of the company's sales happen in its stores.
CFO Gary Millerchip shared some insight on the company's digital business during its third-quarter earnings call.
“So, if you just do the sort of math on our business and how we define digital, which, as a reminder, doesn't include the delivery solutions that we offer through Instacart. It doesn't include our travel business where most of it would be online. So, there's a number of elements that I think others might include in the sort of e-commerce business that we wouldn't,” he said.
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While the actual number is bigger, Millerchip shared how the company sees its digital business.
“So, on the straight math on how we define it, it would be about 8% of our business. If we included some of the components that others would include, it probably takes it to slightly north of 10%. And then, if you would take gas out of our total sales, which I know, obviously, there isn't any commerce element to gas, it's around the 12% of total sales that we generate today,” he added.
