When it comes to teaching my kids about money, I like to use real-world companies and examples to make the lessons more relatable and practical.
In this blog, I share a few surprising facts about two of the most well-known companies in the world—Coca-Cola and PepsiCo—and two important money lessons I’ve passed on to my daughters.
Many people assume that Coca-Cola makes more money than PepsiCo, but the truth is a bit different.
Lesson 1: It's Not Just About Revenue—It's About Multiple Sources of Income
Many people assume that Coca-Cola, with its iconic brand and worldwide recognition, must be the bigger earner compared to PepsiCo. But in reality, PepsiCo actually generates significantly more revenue than Coca-Cola.
In 2023, PepsiCo’s total revenue was $94 billion, while Coca-Cola’s revenue stood at $46 billion—less than half of PepsiCo’s total. This is where the lesson begins.
I told my daughters that the reason PepsiCo’s revenue is so much higher isn’t just because they sell more drinks (although that’s a part of it). It’s because PepsiCo has a much more diversified business model.
PepsiCo owns Frito-Lay (snacks like Lay’s and Doritos), Tropicana (juices), Quaker Oats, and a number of other brands. These various product lines provide PepsiCo with multiple streams of income beyond soft drinks. Coca-Cola, on the other hand, is primarily focused on beverages.
This is an important lesson: having multiple sources of income is a powerful way to build wealth.
Many people believe that someone with a high-paying job is earning the most, but that’s not always true. It could be someone with a smaller title or salary who has several income streams (like dividends, rental income, or royalties) that ends up with a higher overall income. I explained to my daughters that just because someone has a fancy job title or a high salary, it doesn’t mean they’re making more money in total. It’s all about having different sources of income, just like PepsiCo.
Lesson 2: High Revenue Doesn’t Always Mean High Profit
While PepsiCo has higher revenues, Coca-Cola actually outperforms PepsiCo in terms of profitability. Coca-Cola’s net profit margin (income less expenses) is significantly higher than PepsiCo’s, even though its revenue is lower.
In 2023, Coca-Cola's profit was about $11 billion, giving it a net profit margin of approximately 24%. PepsiCo’s profit, on the other hand, was around $7 billion, with a lower margin of just under 8%. This means that for every dollar Coca-Cola earns, it keeps more of it as profit compared to PepsiCo, even though PepsiCo brings in more money overall.
This lesson is key when teaching kids about managing money: It’s not just about earning more—it's about keeping more. Many people focus on increasing their income but overlook the importance of controlling spending and saving. High earnings can be great, but if you’re spending more than you earn, you’ll never build wealth. Coca-Cola’s success highlights the importance of efficiency—keeping a larger portion of what you earn and investing it wisely.
I’ve explained to my daughters that there will be times when they might earn a decent income but feel like they aren’t making progress financially. I told them to focus not just on how much money they bring in, but on how much they can save and keep. It’s the difference between high revenue and high profit.
"It’s not about how much you make—it’s about how much you keep."
The Two Money Lessons: Diversification and Profitability
So, what can we take away from PepsiCo and Coca-Cola? For me, these two companies offer two critical money lessons that I want my daughters to understand as they grow:
Diversification of Income: Don’t rely on just one source of income. Explore other opportunities, whether it’s through investments, side hustles, or assets that generate passive income. The more streams of income you have, the better protected you are financially.
Profitability Over Revenue: Be mindful of your spending and focus on building wealth through savings and wise investments, rather than just chasing higher salaries.
I hope these lessons stick with my daughters as they begin to understand the value of money. The next time they hear about PepsiCo and Coca-Cola, I want them to think about how these companies are both teaching us important lessons about managing our money. Diversify, save, and keep as much as you earn.
Although, when my daughters hear these two brands, they remember the story I told them about the entrepreneur who put his Pepsi vending machine next to his Coca-Cola vending machine to more than double his money. You can read that story here.
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Thanks,
Will
P.S. If you want to help your kids learn more about money in a fun and engaging way, check out my book, Grandpa's Fortune Fables. It’s packed with stories that teach kids important lessons about earning, saving, and investing—perfect for bringing these money concepts to life! Grab a copy today and start building your child's financial future.
