Starbucks' Falling Margins and Turnaround Risks

If you watched the Super Bowl, you probably saw the commercial where the Coca-Cola polar bear did a blind taste test, picked Pepsi, and had to go to therapy. It was hilarious, but what a lot of people don't realize is that is exactly how the original Cola Wars started back in 1975!

Today, Stephen and Andrew dive into the economics of company rivalries. From Coke vs. Pepsi to Costco vs. Sam’s Club and Starbucks vs. Dunkin', we break down the numbers to see who actually comes out on top—and how researching a competitor is the ultimate cheat code for understanding the stock you actually want to buy.

In This Episode, You’ll Learn:

• The Original Cola Wars: A quick history of the 1970s battle between Coke and Pepsi, and what investors can learn from their aggressive marketing tactics.

• The Economics of Rivalry: How to look at the financials of two competing giants to see who actually holds the market advantage.

• The Ultimate Cheat Code: Why researching a company's biggest competitor gives you the best, unbiased data on the stock you actually want to invest in.

Timestamps

04:47 - Pepsi’s Massive Revenue vs. Coke’s Profit Margins

11:06 - Why Revenue is Vanity and Profit is Sanity

12:25 - Comparing Completely Different Business Models

17:14 - Starbucks’ Sinking Margins

29:30 - Why 65% of Costco’s Profit is Subscriptions

36:00 - Does Costco Have the Ultimate Economic Moat?

Resources Mentioned

The Value Spotlight Newsletter: ⁠https://einvestingforbeginners.com/value-spotlight-newsletter⁠/

Have questions or want your story featured? Email the show at ⁠newsletter@einvestingforbeginners.com⁠ or comment below. Your feedback shapes the podcast!

Remember, invest with a margin of safety—emphasis on the safety. Have a great week, and we’ll talk to you next time.

Timestamps are generated by artificial intelligence, and are not 100% accurate depending on the platform used for listening.

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