In market value, Pepsi is it


ATLANTA -- For nearly a decade, Theodore L. Parrish, a 33-year-old investment portfolio manager, has championed PepsiCo stock from Atlanta, the hometown of Coca-Cola.

"Oh, man," he said, "it's a difficult path to take."

His belief in PepsiCo's diversification - soda makes up less than 20 percent of PepsiCo's sales, compared with 80 percent of Coca-Cola's - leads to awkward silences with Coke executives at golf tournaments and irate phone calls from Coke investors who hear him on the local radio.

Recently, when PepsiCo Inc. surpassed Coca-Cola Co. in market value for the first time, Parrish enjoyed a moment of vindication.

"I'm not surprised," he said. "I just regret it's taken so long. People here take Coke too seriously, absolutely too seriously."

In Atlanta, a Coke is not just a Coke: The caramel-colored soda that was invented by a local pharmacist more than a century ago is an elixir; it cures headaches and boosts civic pride.

John S. Pemberton invented Coca-Cola in 1886, the same year that Henry W. Grady delivered his famous speech heralding Atlanta as the "brave and beautiful city" of the New South. Atlanta's fortune has been bound with Coca-Cola's ever since.

Throughout the 20th century, the iconic American soda - possibly the world's most recognizable product - poured money into Atlanta.

The news that Coke shares have declined 1.2 percent in the past year, while PepsiCo shares have increased by 14 percent, has caused discomfort in the city that recently named its downtown entertainment complex - home to the new Georgia Aquarium and the forthcoming World of Coke - Pemberton Place, in honor of Coke's inventor.

"Coca-Cola and Atlanta have grown up together," said Metro Atlanta Chamber of Commerce President Sam A. Williams. "It's impossible to imagine Atlanta without Coca-Cola."

Almost every important institution here has a connection with Coke. The Centers for Disease Control and Prevention is based in Atlanta, thanks to the lobbying of longtime Coke magnate Robert W. Woodruff. Emory University is known as the Coca-Cola University because more than $1 billion of its endowment is in Coke stock.

Yet things have changed since 1991 when D. Raymond Riddle, then president of the Metro Atlanta Chamber of Commerce, claimed that no decision was made in Atlanta without knocking on the door of Coke's North Avenue headquarters.

While Coke remains a big player in Atlanta, it is no longer peerless. Atlanta has the third-largest concentration of Fortune 500 companies - including the Home Depot, UPS, Georgia-Pacific, BellSouth and Delta Air Lines - in the nation, and a metropolitan population of more than 4.7 million.

A decade ago, Coke's market capitalization was $133 billion, more than double PepsiCo's value of $59 billion, but this year it dropped below $100 billion. A growing number of investors say Coke has been slow to target the growing number of health-conscious consumers.

In Atlanta, Coke fans insist that the company's declining stock value is temporary, born of fickle Wall Street speculation.

"It doesn't worry me," said Steve Brumbelow, 56, president of the Atlanta chapter of the Coca-Cola Collectors Club. "I've tried every Cola you could imagine, and Coke's the best cola I've had. It's the taste. It has a magical quality."

Brumbelow, a health care coordinator for Lucent Technologies, used to drink 12 Cokes a day but switched to six Diet Cokes when he was diagnosed with diabetes.

Health is not a preoccupation at the Varsity, the world's largest drive-in restaurant, which has served chili dogs and onion rings since 1928. The Atlanta institution dispenses nearly 3 million servings of Coca-Cola a year, more than any other restaurant in the world.

For Gordon Muir, 40, the vice president of the Varsity and grandson of its founder, the idea of drinking Pepsi makes him feel guilty. "I was born and bred in Atlanta," he said. "When I go to a restaurant that doesn't serve Coke, I have a hard time."

For most of the 20th century, it was almost impossible to buy Pepsi in Atlanta. But now Pepsi is sold at Taco Bell and Pizza Hut restaurants - which are owned by PepsiCo - not to mention every chain supermarket and gas station in Atlanta. Perhaps more significantly, Atlantans drink Gatorade sports drinks, Aquafina water and Tropicana juices without realizing they are owned by Pepsi.

"Atlanta is not as Coke-centric as you might think," said Parrish, the investment manager. "Pepsi is already here. It has snuck in the back door."

Jenny Jarvie writes for the Los Angeles Times.

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