The soft drinks market is a huge global industry providing many opportunities for companies and their investors to profit over the long term.  Different players offer their own risk and return trade-off, so let´s take a look at some alternatives to find out which may be a convenient addition for your portfolio.

Solid giants
Coca-Cola (KO 1.00%) and PepsiCo (PEP 0.05%) are among the biggest and most respected corporations in the world. They both offer unquestionable soundness due to their globally recognized brands, abundant financial resources and gigantic distribution networks. Coke and Pepsi are among the favorite names in the dividend investing community, and for good reasons.

Coke has raised its dividend payments over the last 51 consecutive years through all kinds of economic and political scenarios. While Pepsi´s track record of dividend increases is a bit shorter with 41 consecutive years, it's still a remarkable achievement reflecting unquestionable fundamental strength.

Both companies pay similar dividend yields in the area of 2.8% for Pepsi and 2.9% for Coke, but Pepsi has a slightly lower payout ratio around 50% versus 55% for Coke. When it comes to dividend growth, Coke is ahead of Pepsi lately, in 2013 the company increased its dividend by 10% in 2013 versus a 6% increase for PepsiCo.

Coca-Cola won the cola wars in 2010, when Coke and Diet coke became  the two most consumed carbonated drinks brands in the U.S., relegating Pepsi to a third position. PepsiCo, on the other hand, owns a leadership position in the global snacks market through its Frito-Lay division, which provides diversification to the company´s operations.

Coke and Pepsi have been facing stagnant volume growth in developed markets due to healthier diet habits and market saturation, but emerging countries are still providing room for expansion.

Coke reported a 9% increase in volume in Eurasia and Africa during the last quarter, while Pepsi delivered 9% organic volume growth in beverages and 6% organic volume growth in snacks in Asia, Middle East & Africa (AMEA) during the same period. Performances in the Americas and Europe have been quite disappointing for both companies, though. 

Coke and Pepsi are two solid and safe companies, especially adequate for dividend investors, but they are unlikely to reward investors with exciting growth in the middle term.  Analysts are estimating growth rates of 7.9% and 8.3% for Coke and Pepsi, respectively, in the next five years.

Valuation levels are quite similar, but Coke has delivered better performance over the last five years with earnings-per-share growth of 9% annually versus 2.7% for Pepsi. If you are looking for a high-quality bet in the sector, Coca-Cola, which owns the most valuable brand in the world according to Interbrand, may be the way to go.

Growth opportunities
Those searching for alternatives with superior growth potential, may want to take a look a smaller, more dynamic, companies like Monster Beverage (MNST -0.77%).

Monster is the second biggest player in energy drinks behind Red Bull. The company has benefited enormously from growing demand over the last years: Monster delivered earnings-per-share growth in the area of 20% annually in the last five years, and it still has plenty of opportunities for international expansion.

On the other hand, growth has decelerated materially in the last quarter, and health concerns surrounding energy drinks are a remarkable risk for the company. The recent pullback after the disappointing earnings report may easily turn out to be a buying opportunity, but investors need to pay close attention to the health implications and changing consumer habits among the younger demographics which are Monster´s prime market.

With a market cap of $1.4 billion SodaStream (SODA) is much smaller than other players in the industry, but the company has a disruptive business model and is delivering outstanding financial performance.

The company is revolutionizing the carbonated drinks industry by allowing consumers to make their own carbonated beverages at home with a variety of different flavors. This provides many advantages over traditional soda consumption: more flexibility, lower costs, better environmental implications, and much healthier choices.

Consumers are embracing the product. SodaStream delivered an annual increase of 38.4% annually in sales and 55.9% in earnings per share over the last five years. Last quarter was above analyst's expectations too as the company reported a 28.5% increase in revenue during the quarter, and earnings per share grew at an even faster 33.3%.

Performance was strong across the board. Soda maker unit sales increased 18% in the quarter, carbonator refills grew 30%, and flavor sales were 25% higher versus the same quarter in the previous year. The Americas segment, where companies like Coke, Pepsi and Monster are facing difficulties, showed a whopping increase of 55% in revenue.

SodaStream is the disruptive player in the industry, considering its relatively small size, innovative business model and outstanding financial performance; this is a good alternative for investors looking to position themselves in a company with exceptional growth prospects in the business.

Bottom line
It all depends on your overall investment strategy. When it comes to dividend investors looking for rock-solid defensive plays in the soft drinks business, there is no match to Coca-Cola. However, if you want to add more flavors to your portfolio, SodaStream offers some truly outstanding potential for growth over the coming years.