The soda game has been dominated by Coca-Cola for over a century, but Pepsi may take the lead thanks to its secret weapon: food.

In both companies most recent financial reports, PepsiCo. had the edge over Coca-Cola Co. by $5 billion.

But the question is, how?

While Coca-Cola brands range from Powerade to Dasani, the only thing they produce are beverages, and even though it’s something they do very well, Pepsi has the upper-hand. Acquiring companies like Frito-Lays has allowed PepsiCo. to break into the former side of the food and beverage industry, and become the $152 billion company it is today. While similar in origin, the dueling soda giants have begun to diverge over the last decade with Pepsi soaring higher than Coke every day.

Separated at birth

PepsiCo. and Coca-Cola Co. have been constant competitors since the late 19th century when both companies got their start. Coke was invented by John Pemberton as a substitute for his morphine addiction, while Pepsi was created by Caleb Bradham with the intention of boosting energy.

Nearly identical in formula, the sugary colas have been each company’s flagship product for over a century, their almost identical taste spurring an eternal debate between consumers over whether there is a difference in taste. Either way, both have remained constant companions in both the stock market and supermarket since their establishment.

A Comparison of Pepsi Co. and Coca Cola Co. by laurensproule on TradingView.com

With an increase in obesity and diabetes across North America, a significant amount of pressure has been placed on the soda industry to develop alternative options in order to stay afloat. Both Pepsi and Coke have introduced juice, water, and diet beverages into their product lines in an effort to appeal to the increasingly health-conscious consumer. Coca-Cola recently announced the re-launch of Coca-Cola Plus, a sugar and calorie free beverage with added fibre. Marketed as the “first Coke to actively improve your health,” Coca-Cola Plus is the latest in a stream of Coke products to be deemed “the healthier option.”

Pepsi has made similar strides as its competitor, answering Coke’s Diet Coke, Coca-Cola Zero, and Coca-Cola Life with “diet-friendly” alternatives of its own, like Diet Pepsi, Pepsi Max, and Pepsi True.

All that and a bag of chips

The waning interest of the consumer has forced both companies to diversify their portfolio, a challenge that Pepsi has taken up while Coke has not. Diversification, Steve Balaban says, is a wise business strategy and a sure-fire way to decrease the risk of failure. The Toronto-based financial analyst likens PepsiCo. to Rogers Media, another company that adapted and grew their product offering with great success.

Since 1965, Pepsi has been absorbing other food and beverage corporations across the globe. PepsiCo. declined to comment on its ever-expanding dossier, although a 2012 press release announced its entrée into the dairy industry, suggesting Pepsi has no interest in limiting itself to the snack aisle.

The extent of diversification Coke has engaged in is investing in the bottling companies that package its products. Coke’s Bottling Investments Group division made the largest contribution to the company’s revenue from July to September last year, as seen in its most recent financial statement. The following compares Pepsi and Coke’s most recently released profits broken-down by division.

Even though Coca-Cola as a whole is worth more than Pepsi by about $27 billion, the gap is shrinking. Coke’s long-term partnerships with companies like McDonald’s and Ford have proven to be very lucrative over time, giving Coca-Cola Co. a cushion between itself and PepsiCo. But before Coke gets too comfortable in the lead, it should talk to the hare.