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It's not easy being a pop star these days. Folks are scaling back on soda consumption, and both Coca-Cola (NYSE:KO) and PepsiCo (NYSE:PEP) have been countering the trend by expanding into new product categories.

Overall soda volumes have fallen for nine years in a row according to industry watcher Beverage Digest, slipping 3% last year. Diet sodas used to be a growing niche, but that category took an even harder hit than non-diet beverages last year.

Let's crack open a can in order to take a closer look at the two soft drink giants.

All bottled up
With millennials turning to everything from fancy iced coffee brews to adrenaline-juicing energy drinks to provide caffeinated kicks it really wasn't a surprise to see both Coke and Pepsi slip in popularity again this past quarter.

Coca-Cola's sparkling beverage sales in North America declined 1% during the third quarter, and that was actually slightly better than its rival. Coca-Cola scored with its Share a Coke campaign that saw Coke cans featuring terms of endearment and personal names. Pepsi was a relative laggard with its carbonated-soft-drink volume slipping 1.5% in North America during the same period.

The cola wars are over. Coke and Pepsi lost. There are too many parents and regulators worried about what sugary soft drinks are doing to children in terms of childhood obesity and diabetes. Pepsi used to market itself as the choice of a new generation, but now we're seeing that it's not the choice of a new generation. It's not Coke, either. 

If investors are trying to assess the better investment they're going to have to look beyond each beverage behemoth's namesake soft drinks. 

Pouring into diversification
Coca-Cola may be the larger of the two meandering purveyors of pop, but PepsiCo has been working on broadening its portfolio for decades. Frito-Lay snacks, Quaker oatmeal, and Gatorade are part of the PepsiCo empire. In fact, PepsiCo generated more money from food than it did beverages last year. 

Coca-Cola has tried to make up for lost time by taking minority stakes in Keurig Green Mountain (NASDAQ:GMCR) and Monster Beverage (NASDAQ:MNST) earlier this year. The investments make sense. Keurig's the undisputed champ in single-serve coffee. Monster joins Red Bull as the two titans in energy drinks, a market where both Coca-Cola and PepsiCo have tried to wrestle their way in but couldn't unseat the two kings of the adrenaline-pumping hill. More importantly, coffee and energy drinks are growing at a time when carbonated sodas are not.

Coca-Cola and PepsiCo have poured money into bottled water and juice lines. They know that there's more to life than sparkling beverages. PepsiCo has the upper hand when it comes to diversifying away from liquid fuel, but CocaCola's portfolio of non-soda beverages is starting to get impressive. 

Valuation on tap
The market valuations on Coca-Cola and PepsiCo are surprisingly similar. Both stocks fetch 19 times next year's projected earnings. That's a pretty steep multiple for two companies growing so slowly -- analysts see revenue climbing 1.1% and 2.5% and Coca-Cola and PepsiCo, respectively, next year -- but naturally there's a premium to be paid for the iconic brands under their watch.

Both stocks also command similar yields with extensive streaks of payout boosts. Coca-Cola's 3% yield narrowly tops PepsiCo at 2.8%. 

When PepsiCo hiked its dividend by 15% in May it made it 42 consecutive years of increasing payouts. Coca-Cola's streak stretched to 52 years when it pushed through its latest boost in February. 

The valuation battle is ultimately closer than one would think and it seems that the cola wars wage on. However, it's hard not to give PepsiCo the upper hand here. It's simply been more consistent. Analysts see PepsiCo growing its revenue and earnings this year, and that's something that can't be said about Coca-Cola. It's also easier to warm up to PepsiCo's broader product lines at a time when sparkling beverages are falling out of favor. Both stocks should continue to serve investors well -- with more dividend hikes along the way rewarding the patient -- but PepsiCo has a slight edge over Coca-Cola in the only cola war that matters.  

Rick Munarriz owns shares of Keurig Green Mountain. The Motley Fool recommends Coca-Cola, Keurig Green Mountain, Monster Beverage, and PepsiCo. The Motley Fool owns shares of 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.