The Cola Wars
by Samarth Singh
In 1886, Dr. John Pemberton introduced a new drink to the world: Coca-Cola. Using carbonated water, the drink was refreshing and best served cold. A few years later, in 1892, the Coca-Cola Company was officially incorporated. Meanwhile, in North Carolina, the Pepsi-Cola Company was founded by Caleb Bradham. Little did either of the companies know, their industry would feature one of the world’s largest duopolies and biggest rivalries the business world has known. In fact, history would later call this ‘The Cola Wars’.
In 1915, Coca-Cola’s iconic contour bottle was patented. Initially, things didn’t work well for them. The Second World War forced Coca-Cola to declare bankruptcy twice. PepsiCo even offered to buy Coca-Cola after both bankruptcies, but the company declined. It slowly recovered by selling at 5 cents per bottle. Following this, though both Pepsi and Coca-Cola had a very similar product and worked in the same industry, they took very different paths, with very different business strategies and marketing campaigns.
Coca-Cola has historically tried to create a sense of nostalgia and belonging with a classy feel in its marketing campaigns. They showed how Coke was a product not for a country or state, but for the entire world in the campaigns Whoever You Are, Whatever You Do, Wherever You May Be, When You Think of Refreshment Think of Ice Cold Coca‑Cola (1939), and I'd Like to Buy the World a Coke (1971). Their marketing campaigns connect emotionally with consumers. Enjoy Thirst (1923), Have a Coke and Smile (1979), Life tastes Good (2001), and Open Happiness (2009) showcase not only the product but the experience of drinking it. They didn’t forget to emphasise how their product was better with It's the Real Thing (1969), You Can’t Beat the Real Thing (1990) and Real Magic (2021). Their Christmas classics, featuring Santa Claus and the Northern Lights, are one of the most recognised marketing campaigns in the world.
Pepsi, on the other hand, focused on connecting with a younger audience through pop culture and famous celebrities. The Pepsi Generation (1963) featured younger people enjoying the drink and the famous slogan You've got a lot to live, And Pepsi's got a lot to give. It featured Michael Jackson, further adding to the appeal. Other famous celebrities/bands featured in Pepsi commercials were Michael Fox, Spice Girls, David Beckham, Britney Spears, Beyonce, Nicki Minaj and One Direction. It is important to note that Pepsi was betting on the younger audience while Coca-Cola made its product seem universal.
Over the years, Coca-Cola has remained confined to the beverage industry. Some other popular soft drinks by the company are Coca-Cola Zero Sugar, Diet Coke, Fanta and Sprite. This has likely allowed it to spend more time in research and development and do what it does best: make great drinks. This is why most of the major fast food chains: McDonald’s, Subway, Burger King, Wendy’s, Domino’s, Hardee’s and Five Guys sell Coke. Note that these companies are not owned by the Coca-Cola Company; they just choose to serve their drinks.
Pepsi, however, diversified its sources of income and distribution channels. Other than beverages, Pepsi owns Frito-Lay, which owns chip brands like Lay’s, Doritos and Cheetos. Add to that, Pepsi owns Yum! Foods, which is the parent company of Pizza Hut, Taco Bell, KFC and Papa John’s, which is also a reason why you won’t find Coca-Cola at their stores.
This rivalry might seem detrimental to the industry as a whole. But it is this competition that gave us some of the most heartwarming and exciting ads of all time, and constant product innovation for one of the most popular drinks in the world. In fact, the competition between Pepsi and Coca-Cola has been healthy; when, in 2006, someone working in the Coca-Cola company offered to sell its trade secret to Pepsi, Pepsi went on to inform both Coca-Cola and the FBI about the illegal trade. PepsiCo did so because it realised that trade secrets were important in any industry.
Today, PepsiCo and Coca-Cola have a share of 18.8% and 46.5% in the carbonated soft drink market. Coca-Cola has a market cap of $298B and Pepsi has $185B. However, Coca-Cola makes a revenue of $47B while PepsiCo makes a revenue of $90B. Leaving business aside, consumers continue to enjoy the drink, with most of them noticing virtually no difference between either of the two. Their story shows how despite having the same product, different business decisions can lead to a very different position in the market.
Sources:
https://www.coca-colacompany.com/about-us/history/the-history-of-the-coca-cola-contour-bottle
https://globalizationandhealth.biomedcentral.com/articles/10.1186/s12992-021-00781-6/tables/2
https://www.coca-colacompany.com/about-us/history/history-of-coca-cola-advertising-slogans
https://en.wikipedia.org/wiki/Cola_wars#Comparison_of_products
