There are three reasons why beverage giant Coca-Cola (NYSE:KO) should continue to remain in your portfolio: a distribution infrastructure like no other, persistent growth potential, and a rock-solid dividend. It should be no surprise smaller companies such as Dr Pepper Snapple Group (NYSE:DPS) and energy drink company Monster Beverage (NASDAQ:MNST) will continue to bow to Coca-Cola in order to operate in the industry. Even snack/beverage giant PepsiCo (NYSE:PEP), faces massive headwinds in the global beverage market created by Coca-Cola's massive economies of scale.


Source Flickr--Gschneid

Its distribution system provides a moat
Coca-Cola boasts "the world's largest beverage distribution system" serving as its greatest strength. It even distributes the products of companies such as Dr Pepper Snapple Group in fountain machines across the globe and some of the products for Monster Beverage, demonstrating that even Coca-Cola's competitors rely on Coca-Cola for distribution of their products. Coca-Cola's distribution system serves as a huge barrier to entry for prospective new entrants into the marketplace. In addition, smaller players such as Monster and Dr Pepper Snapple Group need to abide by rules laid down by the King of Beverages in order to access its massive distribution system.

Only one pure competitor
This leaves PepsiCo as Coca-Cola's only pure competitor due to PepsiCo's comparable scale and lack of reliance on Coca-Cola's infrastructure. However, PepsiCo also sells snacks, making Coca-Cola the largest pure nonalcoholic-beverage play in the world. PepsiCo's current strength lies in snacks, giving it a leg up on Coca-Cola in terms of product diversity. In 2013, PepsiCo's snack volume when factoring out acquisitions, divestitures, and currency translations exceeded beverages by a 3-to-1 margin. However, you may argue that Coca-Cola can focus on solidifying its position as a global beverage leader.

Emerging markets lead in growth
In Eurasia & Africa and the Pacific regions, unit case volume of finished product grew 7% and 3%, respectively, meaning that most of Coca-Cola's growth comes from the emerging and developing regions of the world. By contrast, case volume of finished product remained even versus the same time last year in North America. Latin America saw volume inch up by only 1%. Europe saw overall case volume decline 1%.

Concentrate sales saw a similar distribution in numbers. The Eurasia & Africa segment saw 7% and 5% increases last year. In North America, concentrate sales were even while Latin America and Europe saw a 1% increase and a 1% decrease in sales, respectively. 

Things to look for
Look for slow growth derived mostly from the emerging markets to occur over the next decade for Coca-Cola and subsequently its shareholders. PepsiCo will most likely get its growth from the emerging markets and snacks. Dr Pepper Snapple Group will most likely languish in the left field somewhere as its lacks the scale to compete effectively. Monster Beverage shareholders should benefit from consumers who want that midday jolt while its distribution gets enabled by Coca-Cola. Feel free to add these companies to your Motley Fool Watchlist.

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William Bias owns shares of Coca-Cola. The Motley Fool recommends Coca-Cola, Monster Beverage, and PepsiCo. The Motley Fool owns shares of Coca-Cola, Monster Beverage, and PepsiCo and has the following options: long January 2016 $37 calls on Coca-Cola and short January 2016 $37 puts on Coca-Cola. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.