EXECUTIVE SUMMARY

Marketing warfare is a term used to describe some of the techniques and tactics
marketeers use in their everyday language. There are two types of force a business can
use against it's competition. The first is offensive attack and the second is defensive
attack.
Frontal attack, Flanking, Encirclement, Bypass and Guerilla warfare are some
examples of an offensive marketing warfare strategy. When using the offensive strategy
it is important to remember three important principles: 1. The main consideration is the
strength of the leader's position. 2. Find a weakness in the leader's strength and attack at
that point. 3. Launch the attack on as narrow a front as possible (Ries, 1986).
Defensive marketing warfare involves employing those tactics and strategies to
maintain the market share a company has already achieved. There are three important
guidelines to remember in defensive marketing warfare: 1. Only the market leader
should consider playing defense. 2. The best defensive strategy is the courage to attack
yourself. 3. Strong competitive moves should always be blocked (Ries, 1986).
Some examples of current marketing warfare can be seen in the cola, beer and
burger wars. Through observing these market segments, a marketer can see marketing
warfare in action.
All in all, marketing warfare is something each marketer will experience in his
marketing career. In order to be a successful marketer it is important to have a complete
understanding how to win the marketing war.
MARKETING WARFARE
INTRODUCTION
Marketing Warfare is a term used to describe some of the techniques and tactics
marketeers use in their everyday language. First, there are two types of force a business
can use against it's competition. The first is offensive attack and the second is defensive
attack. Before a person can understand the concept of marketing warfare they must
understand the terms which are associated with this type of marketing strategy.
The ideas behind attack and defend are two very different ideas. Attack basically
means to seek more than one has, moreover to take what someone else possesses (Kotler,
1981). Defense means to protect what one has already acquired.
OFFENSIVE MARKETING WARFARE
Frontal attack, Flanking, Encirclement, Bypass and Guerilla warfare are some
examples of offensive strategy. When using the offensive strategy in marketing warfare,
Al Ries and Jack Trout suggest three offensive principles which include: 1. The main
consideration is the strength of the leaders's position. 2. Find a weakness in the leader's
strength and attack at that point. 3. Launch the attack on as narrow a front as possible
(Ries, 1986).
FRONTAL ATTACK
Frontal attack occurs when a company takes all of their forces and face them
directly opposite of the opponent (Kotler, 1981). In order to be successful with this type
of an attack, statistics show that a factor of five to one is needed for a successful frontal
attack (Kotler 1981). For example, in the 1970's three electronic giants tried to attack
IBM head on against their stronghold on the mainframe computer market (Kotler, 1981).
Each electronic corporation failed because they used a pure frontal attack against IBM's
massive stronghold.
There are many types of frontal attacks including: a pure frontal attack, a limited
frontal attack, price based frontal attack, and research and development based frontal
attack (Kotler, 1985). A pure frontal attack involves matching a competitors product in
all areas of marketing (Kotler, 1985). The product is matched price versus price,
promotion versus promotion, characteristic versus characteristic and so on. Basically, a
pure frontal attack is taking a "look alike" or "me too" strategy (Kotler, 1985). When
using a pure frontal attack, companies should be prepared to expend large sums of
money.
The next type of frontal attack is the limited frontal attack. A limited frontal
attack focuses on specific customers and tries to lure them away from competitors
(Kotler, 1985). One example of a limited frontal attack may occur when a new product
enters the market such as a new type of paint. The paint company would pursue a select
number of their competitor's customers and bring them in on a whole number of product
dimensions simultaneously (Kotler, 1985).
Another type of frontal attack is the price based frontal attack. In priced based
frontal attack, the aggressor focuses mainly on the price of a product to gain more
customers. Every product characteristic is matched; however, the competition beats his
competitor on price (Kotler, 1985).
Finally, research and design is a fourth type of frontal attack. This is a more
difficult type of attack to employ. The competitor tries to reduce production costs,
improve the product, and other characteristics which would enhance product value
(Kotler, 1985). With this type of attack, more creative ideas are implemented which
allow for a better product.
There are three conditions that need to be met by a firm before it embarks in a
frontal attack (Kotler, 1985). First, the firm needs an adequate amount of resources to
support the attack (Kotler, 1985). Second, the firm must be able to create and sustain a
competitive advantage over it's competitors (Kotler, 1985). Finally, the company must be
able to persuade their competitor's customers to try their product and become their loyal
customer. In the frontal attack, it is important that everyone in the firm and those who
purchase the product perceive a competitive advantage (Kotler, 1985).
FLANKING MARKETING WARFARE
A second type of offensive strategy is the flanking strategy. In a flanking
strategy, a company focuses it's forces on the weaker sides of it's competitor (Kotler
1981). Three principles of flanking warfare are mentioned in Al Ries and Jack Trout's
book, Marketing Warfare. These principles are: 1. A good flanking move must be made
in an uncontested area. 2. Tactical surprise ought to be an important element of the plan,
and 3. The pursuit is as critical as the attack itself (Ries, 1986). Usually this offensive
strategy is used by a company that does not have overwhelming superiority, but may
have an advantage in one particular area. For example, in the mid 1970's Xerox owned
eighty-eight percent of the plain-paper copier market; however, almost ten years later the
Japanese based Canon Copier took over half of Xerox's market (Kotler 1981). The main
reason Canon took over such a large portion of Xerox's market was by use of the flanking
strategy. Canon focused on the small size copier market that could not afford Xerox's
larger copiers. This attack was successful because it put the attackers strength against the
defenders weakness (Kotler 1981).
There are two types of flanking strategy; Geographical and Segmented flanking
(Kotler, 1985). Geographical flanking occurs when a firm attacks different areas within
the world or country where competitors are nonexistent or not very strong (Kotler, 1985).
The Coca-Cola Company uses this type of marketing strategy. When I interviewed Anna
Whaley, Director of world wide marketing and sales, she said a majority of Coca-Cola's
profits will come from the international areas where competition is not as fierce.
A second type of flanking involves identifying market areas or needs not being
served by competitors within a geographical area (Kotler, 1985). Segmented flanking
potentially can be more powerful than geographical flanking attacks because they satisfy
market needs the competitor has ignored (Kotler, 1985). The Japanese have used
segmented flanking when entering the United States market (Kotler 1985). They brought
products that were different and aimed them at neglected market segments (Kotler, 1985).
These products were smaller or stripped down versions of established products, and they
had more features for the same or lower price (Kotler, 1985). The overall idea of
flanking strategy is to bring a broader coverage of a markets varied needs (Kotler, 1981).
MARKETING WARFARE THROUGH ENCIRCLEMENT
Encirclement is a third type of offensive strategy. When using this type of
strategy a company must have superiority in all areas. Encirclement attacks the
competitor from all sides simultaneously (Kotler, 1981). A ratio of ten to one is needed
to employ this type of strategy (Kotler, 1981). The basic idea of encirclement is to force
the competitor to protect their product from all sides. For example, Smirnoff Vodka used
encirclement strategy when another product was introduced and positioned itself directly
against Smirnoff, but at a lower price (Kotler, 1981). Smirnoff counterattacked by first
raising it's prices, which preserved their quality image. After raising their prices, they
introduced another brand, marketed it at the same price as the competition, and
introduced another brand at a lower price (Kotler, 1981).
There are two types of encirclement strategy: product encirclement and market
encirclement (Kotler, 1985). Product encirclement introduces products with many
different qualities, styles, and features that overwhelm the competition's product line
(Kotler, 1985). Many Japanese firms have encircled U.S. products such as televisions,
radios, hand-held calculators, watches, and stereo equipment (Kotler, 1985). Market
encirclement goes beyond the end user, and focuses on the distribution channels (Kotler,
1985). Seiko is one example of market encirclement. By gaining every available
distribution channel for watches, Seiko took over as much shelf space as possible (Kotler,
1985). There are some risks to be aware of when employing the encirclement strategy.
Having the substantial resources and organizational commitment are two factors needed
before using encirclement strategy. Because it is necessary to have these two
requirements; winning a battle through encirclement takes a great deal of time.
MARKETING WARFARE THROUGH BYPASS
A fourth type of offensive strategy involves the bypass. A bypass attack wins the
battle through attacking areas not defended (Kotler, 1981). When Colgate-Palmolive
tried to enter the nonwoven textiles and health care business, it did not have to fight
Procter and Gamble's strengths because they used the bypass strategy (Kotler, 1981).
There are basically three types of bypass strategy: develop new products,
diversify into unrelated products, and expand into new geographical markets for existing
products (Kotler, 1981). Developing new products is a fairly easily understood bypass
method. Rather than copying the leader, the competitor creates entirely new products
thus gaining a larger market share of untapped customers.
Diversifying into unrelated products is a second type of bypass strategy. Rather
than remaining in a single-industry business the firm will venture out into product lines
that are different from their one single product. Sony has employed this bypass strategy
through entering the restaurant and construction business (Kotler, 1985).
One reason companies may use the bypass strategy is the large amount of
congestion in the competitive battleground (Kotler, 1985). For example, if a company
produces a new product, the company basically moves the new product to a new level
within the same product market area (Kotler, 1985). Moving into digital and electronic
watches may bypass the mechanical watch market; however, the company is still fighting
for a position within the watch industry (Kotler, 1985). Conversely, movement into an
entirely new geographical market usually allows a company to bypass competitors
completely.
GUERILLA MARKETING WARFARE
A final type of offensive warfare is guerilla warfare. Some of the principles that
can be used when determining when to use guerrilla warfare are the following: 1. Find a
segment of the market small enough to defend, 2. No matter how successful you become,
never act like the leader, and 3. Be prepared to bugout at a moment's notice (Ries, 1986).
Guerilla warfare basically involves winning small victories that can over time amount to
a large gain in market share (Kotler, 1981). This attack works because it is very
unconventional which makes it difficult for the defender to counter-attack, and because
they are aimed at small, weak, and unprotected market positions (Kotler, 1981).
One example of guerilla warfare occurred when IBM won a lawsuit against
Hitachi on the grounds that Hitachi stole IBM software. Because IBM won this small
battle, Japanese computer manufacturers had to become defensive by investing large
sums of money into scarce software research and development personnel who had to re-
write old programs and develop new programs which did not interfere with IBM's
intellectual property rights (Kotler, 1981). This type of guerilla warfare pushed Japanese
computer makers back many years.
Guerilla strategy is usually implemented by companies who are smaller in market
position and resource base than the firm they attack. This strategy has usually been used
by the Japanese on U.S. firms which have caused a large drain on the resources used by
the U.S. firms (Kotler, 1985).
DEFENSIVE MARKETING WARFARE
Defensive marketing strategy involves employing those tactics and strategies to
maintain the market share a company has already achieved. There are many ways a
company can maintain it's market share. Some important guidelines in defensive
marketing warfare are: 1. Only the market leader should consider playing defense, 2.
The best defensive strategy is the courage to attack yourself, and 3. Strong competitive
moves should always be blocked (Ries, 1986). Fortification, counter attack, mobile
defense, strategic retreat and position defense are five techniques a company can use in a
defensive strategy.
FORTIFICATION MARKETING WARFARE
First, fortification is based on the concept of the protected fort (Kotler, 1981).
The idea is to have every area of the company or product protected leaving no
weaknesses for the attacker to exploit (Kotler, 1981). One example of market
fortification is within General Foods coffee business. General Foods has entries in
physical, price, and perceptual positions in the marketplace (Kotler, 1981). From
decaffeinated coffees to premium brands, General Foods has complete coverage of the
market. Because of such market domination, other competitors have few unserved or
poorly served markets to attack (Kotler, 1981).
This type of defense can be risky. A pure position defense presumes little change
in the product market or the industry (Kotler, 1985). It is important when using this type
of defense to move the product with the changing technologies and market evolution or
else the product can become outdated or even lose it's marketability.
COUNTERATTACK
Counterattack is a second type of defensive strategy. A counterattack exploits the
competitor's weaknesses where it may involve an attack on a defended terrain (Duro,
1987). This type of defense allows the attacker to move in and the defender capitalizes
on the attackers mistakes (Duro, 1987). One method of counterattack is to aim the
counterattack at the competitors source of cash (Kotler, 1981). There are two ways a
counterattack can succeed: 1. Cutoff the aggressor's cash supply and 2. Through the
counterattack the counterattacker gains because the attacker cannot defend and attack
simultaneously (kotler, 1981).
MARKETING WARFARE THROUGH MOBILE DEFENSE
A third type of marketing warfare involves mobile defense. Mobile defense
occurs when there is a high degree of mobility in the defense which prevents the attacker
from localizing and gaining forces for a battle (Duro, 1987). The basic idea of a mobile
defense is to avoid holding unnecessary ground. One example of mobile defense came in
1977 when the Japanese went beyond the narrow television receiver an produced video
cassette recorders and tapes (Kotler, 1985). The Japanese did not limit their mobile
defense to just products they also used mobile defense in their manufacturing strategy
(Kotler 1985). Rather than keeping the manufacturing plants in Japan they also
broadened their operations to off-shore facilities in Mexico and the Far East (kotler,
1985). Because of their mobility they have found lower labor costs, and new markets
(kotler, 1985).
STRATEGIC RETREAT
Strategic retreat is fourth type of defensive strategy. The best way to describe
strategic retreat is through an example of what Chrysler Corporation did to defend their
company. Chrysler had just been taken over by Lee Iacocca in 1978 went he second oil
price shock hit in the beginning of 1979. With all the problems facing Chrysler, Iacocca
had to use strategic retreat in order to save the company. Iacocca cut his salary from
$360,000 to one dollar, he cut salaries of higher official ten percent, and he cut
stockholdings in all areas. Rather than making deliveries on expensive freight trains, he
turned to deliveries by truck, and used a simple black and white annual report. Iacocca
sold off many of the plants Chrysler could not afford to operate, and within three years
Chrysler had dropped the break even point from $2.3 million to $1.1 million dollars
(Duro, 1987).
MARKETING WARFARE THROUGH POSITION DEFENSE
A fifth and final type of defensive marketing strategy is position defense.
Position defense uses all of a company's resources to consolidate one's position within the
existing market segment (Duro, 1987). This type of defense usually occurs under stiff
competition or major structural changes, i.e. the drop in oil consumption (Duro, 1987).
Basically position defense means staying with the product or service a company knows
best and avoiding the temptation of diversification.
CURRENT MARKETING WARFARE
Some examples of current marketing warfare include the cola wars, the beer wars
and the burger wars. In Al Ries and Jack Trout's book they divide marketing warfare into
four principles. These four principles addressed in Marketing Warfare include: Principles
of flanking marketing warfare, Principles of guerilla marketing warfare, and the
principles of defensive and offensive marketing warfare (Ries, 1986). In the following
sections of this report each of the current marketing warfare battles will be analyzed
through these principles.
MARKETING WARFARE IN THE COLA WARS
First, in the cola wars, Coca-Cola the one-hundred year old softdrink, did not have
any competition until Pepsi came out with the twelve ounce bottle that sold for the same
nickel that bought 6.5 ounces of Coca-Cola (Ries, 1986). Because of the advertising
scheme used by Pepsi, Coca-Cola was on the spot. Coca-Cola had spent $15 million
dollars on advertising and Pepsi just $600,000. The consumer went for quantity rather
than quality (Ries, (1986). If they increased quantity, Coca-Cola was left with a billion
6.5 ounce bottles, and hundreds of thousands of nickel soft drink machines (Ries, 1986).
Pepsi had created a successful flanking attack which turned into an offensive attack
against the heart of Coca-Cola's strength (Ries, 1986). Pepsi had used offensive principle
number two which was: find a weakness in the leader's strength and attack at that point.
A more modern day experience of marketing warfare occurred when Coke introduced
new Coke, one of the biggest marketing blunders of the century. After many years of
being a leader, Coca-Cola did something a leader should never do - change their formula
to match the sweetness of Pepsi Cola (Ries, 1986). Coke had undermined their own
position (Ries, 1986). One key learned from Coca-Cola's mistake was that perception is
reality. Because Coca-Cola had undermined "the real thing" consumers perception was
that nothing could taste better than the "real thing"; thus, Coke threw int the towel and re-
introduced Classic Coke (Ries, 1986).
MARKETING WARFARE IN THE BEER WARS
Another example of the current state of marketing warfare is occurring in the
famous beer wars. Consumers are bombarded daily with commercials and
advertisements about who has the best beer. One example of marketing warfare occurred
when imported beer was first introduced into the United States. Heineken was an
imported beer and that was it's strength; however, it was imported from Holland (Ries,
1986). Lowenbreau was the second imported beer and they could have used offensive
principle number three against Heinken. Offensive principle number three states:
Launch the attack on as narrow a front as possible (Ries, 1986). Lowenbrau could have
launched an attack against Heniken. Being from Holland a country famous for
windmills, cheese, and canals, the perception of the market was stronger for Lowenbrau
because it was imported from Germany (Ries, 1986). Today, as marketers, we are
constantly fighting a battle within the consumers mind which is consumer perception.
MARKETING WARFARE IN THE BURGER WARS
Guerilla principle number one: pick a segment of the market that is small enough
to defend (Ries, 1986). This is what McDonald's has done in their attack in the burger
war. Up until the birth of McDonald's there had been coffee shops all across America
famous for different delicacies. Rather than trying to combat each type of delicacy,
McDonald's chose to specialize in the hamburger. Because of their strict standards to
cleanliness, procedures, and continuity, McDonald's has remained the leader of the burger
war from it's start (Ries, 1986).
Eventhough their uniformity was a major strength of McDonald's it was also a
weakness. Burger King, the second fastest growing food chain took on offensive
principle number 2: find a weakness in the leader's strength and attack at that point (Ries,
1986). Burger King did just that, they pinpointed the seam which held McDonald's
strength together and they hit it hard. Burger King focused their advertising on "Have it
your way" (Ries, 1986). McDonald's was squeezed and Burger King's sales increased
with this maneuver (Ries, 1986).
CONCLUSION
In conclusion, Marketing warfare will continue to be an integral part of the
marketing world. Each principle discussed in the above paper will aid a company in
ways it can become more competitive. It is important for companies to employ offensive
and defensive tactics when necessary. Through monitoring competition a company will
know when to use the appropriate warfare techniques to be successful in the marketing
arena.
Cola wars in India
The case explains Cola wars in India and brings out the unique challenges which
multinational corporations face in developing countries.
In 2003, the Indian subsidiary of the Coca-Cola Company was awarded the Robert W.
Woodruff Award for outstanding business performance. Coca-Cola's turnaround in India
had come after a period of heavy investments. During the period 1993-2002, the
company had invested $1 billion in India. In 2003, Coca-Cola had 17 manufacturing
units, 60 distribution centers catering to 5,000 distributors and one million retail outlets,
serviced via trucks and three-wheelers. Coca-Cola directly employed 10,000 people.
The two cola giants, who have been waging a desi marketing war since the time they
stepped into the country, tried to take full advantage of this years Indian weather
conditions. But it is difficult to say who emerged victorious.
The latest tricks from the Pepsi bag were: Grow-Up, an answer to Cokes Thums-Up, and
a second juice brand called Twister. Pepsi was extremely cautious about India because
Coke had announced the fact that it is the market leader in non-carbonated beverages, a
segment growing faster than both the companies core soft drinks market. This is apart
from the cola giants flavoured sodas like Sprite or Mountain Dew.
Pepsi had also challenged Cokes taste-test research, which apparently revealed Thums-
Up as a favoured drink among the age group of 12 to 39 years. Pepsi was meticulously
careful in this battle, as Pepsi Indias operations have already threatened to raise
infringement of trademark issues with Coke in the US.
But how could Coke be left behind? It, of course, relied on the successful legwork it had
done in the initial stage. But since over the years the sales have plummeted (dont worry,
along with Pepsis), it started innovative ways of advertising: Coke is putting up ads in
curious places, from public toilets to luggage carousels at airports.
Now both the giants are gearing up for a new battle that is of one-upmanship and,
obviously, better sales.
Lets take a break from the ongoing cola news. How did the carbonated soft drink
industry fall from 71.3 per cent in 1990 to 60.5 per cent last year, when factors like
awareness, lifestyle and population should have ensured huge sales rise? Does that mean
people have suddenly started realising that the (self-created) famous war is just hype and
there is no substance after the initial burp?
Explanations vary, but the basic fact is that people are turning away from fizzy drinks to
healthier bottled waters and bottled teas. Though still only a tiny slice of the soft drinks
market, functional drinks have grown by 62 per cent in volume over the past five years.
No wonder that both the rivals are realising the potential of this segment, and are trying
to tap it as a last survival act.
Nevertheless, it is only in India that the potential of its rich legacy of healthier drinks is
not tapped. We do not have the imagination or the inclination to package and market
them. Instead, we allow global sweet water manufacturers to take advantage of our
palate, which has for centuries savoured buttermilk, neera, nimbupani, ganne ka ras and
so on.
An ongoing drought has threatened groundwater supplies across India, and many
villagers in rural areas are blaming Coca-Cola for aggravating the problem. Coke
operates 52 water-intensive bottling plants in India. In the southern Indian village of
Plachimada in Kerala state, for example, persistent droughts have dried up local wells,
forcing many residents to rely on water supplies trucked in daily by the government.
Some there link the dry wells to the arrival of a Coca-Cola bottling plant in the area three
years ago. Following several large protests, the local government revoked Coca-Colas
license to operate last year, and ordered the company to shut down its $25 million plant.
Similar problems have plagued the company in the rural Indian state of Uttar Pradesh,
where farming is the primary industry. Several thousand residents took part in a 10-day
march in 2004 between two Coca-Cola bottling plants thought to be depleting
groundwater. "Drinking Coke is like drinking farmers blood in India," said protest
organizer Nandlal Master. "Coca-Cola is creating thirst in India, and is directly
responsible for the loss of livelihood and even hunger for thousands of people across
India," added Master, who represents the India Resource Center in the campaign against
Coca-Cola.
Indeed, one report, in the daily newspaper Mathrubhumi, described local women having
to travel five kilometers (three miles) to obtain drinkable water, during which time soft
drinks would come out of the Coca-Cola plant by the truckload.
Water isnt the only issue. The Central Pollution Control Board of India found in 2003
that sludge from the Uttar Pradesh factory was contaminated with high levels of
cadmium, lead and chromium. To make matters worse, Coke was offloading cadmium-
laden waste sludge as "free fertilizer" to tribal farmers who live near the plant, prompting
questions as to why they would do that but not provide clean water to local residents
whose underground supplies were being "stolen."
Another Indian nonprofit group, the Centre for Science and Environment (CSE), says it
tested 57 carbonated beverages made by Coca-Cola and Pepsi at 25 bottling plants and
found a "cocktail of between three to five different pesticides in all samples." CSE
Director Sunita Narain, winner of the 2005 Stockholm Water Prize, described the groups
findings as "a grave public health scandal."
For its part, Coca-Cola says that "a small number of politically motivated groups" are
going after the company "for the furtherance of their own anti-multinational agenda." It
denies that its actions in India have contributed to depleting local aquifers, and calls
allegations "without any scientific basis."
It's cola wars of a different kind in India
New Delhi - Every summer witnesses fierce battles in India between two cola
giants - Coca-Cola
and Pepsi - to capture the country's ! billion soft drinks market" #ut this year the
rivals have $oined
hands to fight not between themselves but with state governments that have
either banned or
mulling similar steps after charges of high pesticide content in them levelled by
an environment
pressure group"
%nd as the implications the findings of the Centre for &cience and Environment's
'C&E( are
percolating among the consumers) the *ade-in-India %merican drinks are going
off the shelves in
educational institutions) government offices and other places as five state
governments have
already banned their sale"
%ccording to the recent C&E study) dangerous levels of pesticide were found in
all the +, samples
of -- soft drinks brands collected by the organisation from !+ different
manufacturing units of
Coca-Cola and PepsiCo spread over -! states"
.he study found a cocktail of three-five different pesticides in all the samples - on
an average !/
times higher than norms laid down by government-run #ureau of Indian &tandard
'#I&("
'.he levels in some samples) for instance) Coca-Cola bought in 0olkata
e1ceeded the #I& standards
by -/2 times for the deadly pesticide 3indane)' said &unita Narain) director of
C&E"
'.hree years after C&E released its findings on pesticide residues in soft drinks)
the new study
shows nothing much has changed" &oft drinks remain unsafe and unhealthy) and
public health
remains severely compromised"'
#ut the soft drinks multinationals disagree" PepsiCo and Coca-Cola - who are
part of the Indian &oft
Drinks *anufacturers %ssociation - both maintain they follow all the regulations
laid by the Indian
government that are among the most stringent in the world"
PepsiCo says the pesticide residue in various items like eggs) rice) apples) tea
and milk products is
much higher" 'Compared with the permitted levels in tea and other food products)
pesticide levels in
soft drinks are negligible)' a company official said"
'%ll our products in India are safe and meet all Indian as well as international
standards" 4e comply
with stringent #I& specifications for packaged drinking water)' said a Coca-Cola
official"
'.he #I& standard for pesticide residue is similar to that of in the E5"'
.he two cola companies have also issued prominent advertisements in some
national dailies
e1plaining their positions"
6a$asthan) *adhya Pradesh) Chhattisgarh) 7u$arat and 0erala have said the
colas cannot be sold
in schools) colleges and government departments" 0arnataka is all set to take a
similar step) while
8ammu and 0ashmir has warned people of the harmful effects of these drinks"
6a$asthan 9ealth *inister Digambar &ingh even warned if the soft drinks
samples taken for testing
Page 1/3
Copyright 2010 IndiaeNews.com. All Rights Reserved.
show pesticide or to1in content above the permissible levels) 'we will put a
complete ban on their
sale in the state'"
.he governments of #ihar) 8harkhand and %ssam have sent cola samples for
tests and will act once
the results come in) while Pun$ab and 9aryana - which have also sent samples
for testing - will
follow central government's orders"
In Pun$ab) samples o
f Coca-Cola) Pepsi) :anta) ,5p and *ountain Dew have been sent for tests" .he
samples were
picked up from %mritsar) 8alandhar) 3udhiana and 9oshiarpur"
4est #engal is yet to take a decision but the state capital's 0olkata *unicipal
Corp has asked
educational institutions) hospitals and canteens to discourage the sale of colas"
In the national capital) the state government plans to hold meetings with school
principals" '%
government circular issued in !22; asking schools not to serve or sell $unk food
including soft drinks
is still in force)' an official told I%N&"
*adhya Pradesh was among the first states to ban the colas in the wake of the
C&E findings"
'.he ban would be effective in all educational institutions including medical and
technical colleges"
<ffenders will be punished under the :ood and Civil &upply and %dulteration
%ct)' an official of the
state government said"
.hese developments have had an impact on sales as well but cola companies
were unwilling to
share that information"
#harat 0umar) owner of an ice cream parlour in #hopal's New *arket area) said
the sales of Pepsi
and Coke had fallen by =2 percent" 'People are shunning the drink)' he told I%N&"
In #ihar - where the state government is planning to ban on cola sales in public
places and
educational institutions - directives have been issued to the state's food control
department to collect
samples"
>"0" 8ayswal) a senior food controller) said the soft drinks would be banned in
#ihar if any
ha?ardous or harmful substance were detected in them"
In nearby 8harkhand) Chief *inister %r$un *unda said@ '<ur e1perts are going
through the C&E
report" If there is a need) we will ban the sale of colas" .he health of the people is
our priority"'
In 0erala - which was the latest state to ban the sale of colas - Chief *inister
A"&" %chuthanandan
has asked Coca-Cola and Pepsi to wind up their operations in the state with
immediate effect"
.he 0arnataka government is contemplating legal action against the
multinational cola firms for
manufacturing and selling soft drinks with high pesticide content that pose health
ha?ards to
consumers in the state"
Page 2/3
Copyright 2010 IndiaeNews.com. All Rights Reserved.
.he 8ammu and 0ashmir government has issued a warning 'alerting the public
not to consume
drinks of Cola giants - Coca-Cola and Pepsi'" .he controller of drugs and food
control wing has
advised people to avoid the drinks as they 'contain highly to1ic) acidic and
addictive ingredients'"
%lthough %ssam has not imposed any ban) it has launched a drive to check the
bottling plants of
ma$or brands" <ther northeastern states too have undertaken similar e1ercises"
'4ith inputs from states(
' B I%N& C India eNews(
The Cola Wars were a campaign of mutually-targeted television advertisements and
marketing campaigns in the 1980s and 1990s between soft drink manufacturers Coca-
Cola Company and PepsiCo Incorporated.
Coca-Cola and Pepsi focused particularly on rock stars; notable soft drink promoters
included KISS, Tina Turner, David Bowie, Rod Stewart, Michael Jackson, Madonna, and
Ray Charles (for Pepsi) and Whitney Houston, Paula Abdul, Weird Al Yankovic, George
Michael, and Elton John (for Coca Cola).
One example of a heated exchange that occurred during the Cola Wars was Coca-Cola
making a strategic retreat on July 11, 1985, by announcing its plans to bring back the
original 'Classic' Coke after recently introducing New Coke.
A Brief History OF PEPSI

Born in the Carolinas in 1898, Pepsi-Cola has a long and rich history. The drink is the invention
of Caleb Bradham left!, a pharmacist and dr"gstore o#ner in $e# Bern, $orth Carolina.
The information p"blished here is provided by PepsiCo, %nc. and may be
accessed at their site& ###.pepsi.com.
The s"mmer of 1898, as "s"al, #as hot and h"mid in $e# Bern, $orth
Carolina. 'o a yo"ng pharmacist named Caleb Bradham began
e(perimenting #ith combinations of spices, )"ices, and syr"ps trying to
create a refreshing ne# drink to serve his c"stomers. *e s"cceeded beyond
all e(pectations beca"se he invented the beverage kno#n aro"nd the #orld
as Pepsi-Cola.
Caleb Bradham kne# that to keep people ret"rning to his pharmacy, he #o"ld have to t"rn it into
a gathering place. *e did so by concocting his o#n special beverage, a soft drink. *is creation, a
"ni+"e mi(t"re of kola n"t e(tract, vanilla and rareoils, became so pop"lar his c"stomers named it
,Brad-s .rink., Caleb decided to rename it ,Pepsi-Cola,, and advertised his ne# soft drink.
People responded, and sales of Pepsi-Cola started to gro#, convincing him that he sho"ld form a
company to market the ne# beverage.
%n 19/0, he la"nched the Pepsi-Cola Company in the back room of his pharmacy, and applied to
the 1.'. Patent 2ffice for a trademark. 3t first, he mi(ed the syr"p himself and sold it e(cl"sively
thro"gh soda fo"ntains. B"t soon Caleb recogni4ed that a greater opport"nity e(isted to bottle
Pepsi so that people co"ld drink it any#here.
The b"siness began to gro#, and on 5"ne 16, 19/7, ,Pepsi-Cola, #as officially registered #ith
the 1.'. Patent 2ffice. That year, Caleb sold 8,968 gallons of syr"p, "sing the theme line
,9(hilarating, %nvigorating, 3ids .igestion., *e also began a#arding franchises to bottle Pepsi to
independent investors, #hose n"mber gre# from )"st t#o in 19/:, in the cities of Charlotte and
."rham, $orth Carolina, to 1: the follo#ing year, and ;/ by 19/8. By the end of 191/, there
#ere Pepsi-Cola franchises in 0; states.
Pepsi-Cola-s first bottling line res"lted from some less-than-sophisticated engineering in the back
room of Caleb-s pharmacy. B"ilding a strong franchise system #as one of Caleb-s greatest
achievements. <ocal Pepsi-Cola bottlers, entreprene"rial in spirit and dedicated to the prod"ct-s
s"ccess, provided a st"rdy fo"ndation. They #ere the cornerstone of the Pepsi-Cola enterprise.
By 19/8, the ne# company #as selling more than 1//,/// gallons of syr"p per year.
=ro#th #as phenomenal, and in 19/9 Caleb erected a head+"arters so spectac"lar that the to#n
of $e# Bern pict"red it on a postcard. >amo"s racing car driver Barney 2ldfield endorsed Pepsi
in ne#spaper ads as ,3 b"lly drink...refreshing, invigorating, a fine bracer before a race.,
The previo"s year, Pepsi had been one of the first companies in the 1nited 'tates to s#itch from
horse-dra#n transport to motor vehicles, and Caleb-s b"siness e(pertise capt"red #idespread
attention. *e #as even mentioned as a possible candidate for =overnor. 3 1917 editorial in the
=reensboro Patriot praised him for his ,keen and energetic
b"siness sense.,
Pepsi-Cola en)oyed 18 "nbroken years of s"ccess. Caleb no#
promoted Pepsi sales #ith the slogan, ,.rink Pepsi-Cola. %t #ill
satisfy yo"., Then came?orld ?ar %, and the cost of doing
b"siness increased drastically. '"gar prices see sa#ed bet#een
record highs and disastro"s lo#s, and so did the price of
prod"cing Pepsi-Cola. Caleb #as forced into a series of
b"siness gambles )"st to s"rvive, "ntil finally, after three
e(ha"sting years, his l"ck ran o"t and he #as bankr"pted. By 1901, only t#o plants remained
open. %t #asn-t "ntil a s"ccessf"l candy man"fact"rer, Charles =. ="th, appeared on the scene that
the f"t"re of Pepsi-Cola #as ass"red. ="th #as president of <oft %ncorporated, a large chain of
candy stores and soda fo"ntains along the eastern seaboard. *e sa# Pepsi-Cola as an opport"nity
to discontin"e an "nsatisfactory b"siness relationship #ith the Coca-Cola Company, and at the
same time to add an attractive dra#ing card to <oft-s soda fo"ntains. *e #as right. 3fter five
o#ners and 1: "nprofitable years, Pepsi-Cola #as once again a thriving national brand.
2ne oddity of the time, for a n"mber of years, all of Pepsi-Cola-s sales #ere act"ally administered
from a Baltimore b"ilding apparently o#ned by Coca-Cola, and named for its president. ?ithin
t#o years, Pepsi #o"ld earn @1 million for its ne# o#ner. ?ith the res"rgence came ne#
confidence, a rarity in those days beca"se the nation #as in the early stages of a severe economic
decline that came to be kno#n as the =reat
.epression.
1898 Caleb Bradham, a $e# Bern, $orth
Carolina, pharmacist, renames ,Brad-s .rink,,
a carbonated soft drink he created to serve his
dr"gstore-s fo"ntain c"stomers. The ne#
name, Pepsi-Cola, is derived from t#o of the
principal ingredients, pepsin and kola n"ts. %t
is first "sed on 3"g"st 08.
19/0 Bradham applies to the 1.'. Patent
2ffice for a trademark for the Pepsi-Cola
name.
19/7 %n keeping #ith its origin as a pharmacist-s concoction, Bradham-s advertising praises his
drink as ,9(hilarating, invigorating, aids digestion.,
19/: 3 ne# logo appears, the first change from the original created in 1898.
19/6 The logo is redesigned and a ne# slogan added& ,The original p"re food drink., The
trademark is registered in Canada.
19/8 The Pepsi trademark is registered in Ae(ico.
19/9 3"tomobile racing pioneer Barney 2ldfield becomes Pepsi-s first celebrity endorser #hen
he appears in ne#spaper ads describing Pepsi-Cola as ,3 b"lly drink...refreshing, invigorating, a
fine bracer before a race., The theme ,.elicio"s and *ealthf"l, appears, and #ill be "sed
intermittently over the ne(t t#o decades.
190/ Pepsi appeals to cons"mers #ith, ,.rink Pepsi-Cola. %t #ill satisfy yo".,
1970 The trademark is registered in 3rgentina.
197; Pepsi begins selling a 10-o"nce bottle for five cents, the same price charged by its
competitors for si( o"nces.
1978 The trademark is registered in the 'oviet 1nion.
1979 3 ne#spaper cartoon strip, ,Pepsi B Pete,, introd"ces the theme ,T#ice as A"ch for a
$ickel, to increase cons"mer a#areness of Pepsi-s val"e advantage.
19;/ Pepsi makes advertising history #ith the first advertising )ingle ever broadcast nation#ide.
,$ickel, $ickel, #ill event"ally become a hit record and #ill be translated into :: lang"ages. 3
ne#, more modern logo is adopted.
19;1 %n s"pport of 3merica-s #ar effort, Pepsi changes the color of its bottle cro#ns to red, #hite
and bl"e. 3 Pepsi canteen in Times '+"are, $e# Cork, operates thro"gho"t the #ar, enabling
more than a million families to record messages for armed services personnel overseas.
19;7 The ,T#ice as A"ch, advertising strategy e(pands to incl"de the theme, ,Bigger .rink,
Better Taste.,
19;9 ,?hy take less #hen Pepsi-s bestD, is added to ,T#ice as A"ch, advertising.
19:/ ,Aore Bo"nce to the 2"nce, becomes Pepsi-s ne# theme as changing soft drink economics
force Pepsi to raise prices to competitive levels. The logo is again "pdated.
19:7 3mericans become more #eight conscio"s, and a ne# strategy based on Pepsi-s lo#er
caloric content is implemented #ith ,The <ight Eefreshment, campaign.
19:; ,The <ight Eefreshment, evolves to incorporate ,Eefreshing ?itho"t >illing.,
19:8 Pepsi str"ggles to enhance its brand image. 'ometimes referred to as ,the kitchen cola,, as a
conse+"ence of its long-time positioning as a bargain brand, Pepsi no# identifies itself #ith
yo"ng, fashionable cons"mers #ith the ,Be 'ociable, *ave a Pepsi, theme. 3 distinctive ,s#irl,
bottle replaces Pepsi-s earlier straight-sided bottle.
19:9 'oviet Premier $ikita Fhr"shchev and 1.'. Gice-President Eichard $i(on meet in the
soon-to-be-famo"s ,kitchen debate, at an international trade fair. The meeting, over Pepsi, is
photo-captioned in the 1.'. as ,Fhr"shchev =ets 'ociable.,
1961 Pepsi f"rther refines its target a"dience, recogni4ing the increasing importance of the
yo"nger, post-#ar generation. ,$o# it-s Pepsi, for Those #ho think Co"ng, defines yo"th as a
state of mind as m"ch as a chronological age, maintaining the brand-s appeal to all market
segments.
1967 %n one of the most significant demographic events in commercial history, the post-#ar baby
boom emerges as a social and marketplace phenomenon. Pepsi recogni4es the change, and
positions Pepsi as the brand belonging to the ne# generation-The Pepsi =eneration. ,Come aliveH
Co"-re in the Pepsi =eneration, makes advertising history. %t is the first time a prod"ct is
identified, not so m"ch by its attrib"tes, as by its cons"mers- lifestyles and attit"des.
196; 3 ne# prod"ct, .iet Pepsi, is introd"ced into Pepsi-Cola advertising.
1966 .iet Pepsi-s first independent campaign, ,=irl#atchers,, foc"ses on the cosmetic benefits of
the lo#-calorie cola. The ,=irl#atchers, m"sical theme becomes a Top ;/ hit. 3dvertising for
another ne# prod"ct, Ao"ntain .e#, a regional brand ac+"ired in 196;, airs for the first time,
b"ilt aro"nd the instantly recogni4able tag line, ,Ca-*oo, Ao"ntain .e#H,
1968 ?hen research indicates that cons"mers place a premi"m on Pepsi-s s"perior taste #hen
chilled, ,Taste that beats the others cold. Pepsi po"rs it on, emphasi4es Pepsi-s prod"ct
s"periority. The campaign, #hile prod"ct-oriented, adheres closely to the energetic, yo"thf"l,
lifestyle imagery established in the initial Pepsi =eneration campaign.
1969 ,Co"-ve got a lot to live. Pepsi-s got a lot to give, marks a shift in Pepsi =eneration
advertising strategy. Co"th and lifestyle are still the campaign-s driving forces, b"t #ith
,<iveI=ive,, a ne# a#areness and a reflection of contemporary events and mood become integral
parts of the advertising-s te(t"re.
1987 Pepsi =eneration advertising contin"es to evolve. ,5oin the Pepsi People, >eelin- >ree,
capt"res the mood of a nation involved in massive social and political change. %t pict"res "s the
#ay #e are-one people, b"t many personalities.
198: The Pepsi Challenge, a landmark marketing strategy, convinces millions of cons"mers that
Pepsi-s taste is s"perior.
1986 ,*ave a Pepsi .ay, is the Pepsi =eneration-s "pbeat reflection of an improving national
mood. ,P"ppies,, a 7/-second snapshot of an enco"nter bet#een a very small boy and some even
smaller dogs, becomes an instant commercial classic.
1989 ?ith the end of the -8/s comes the end of a national malaise. Patriotism has been restored
by an e("berant celebration of the 1.'. bicentennial, and 3mericans are looking to the f"t"re #ith
rene#ed optimism. ,Catch that Pepsi 'piritH, catches the mood and the Pepsi =eneration carries it
for#ard into the -8/s.
1980 ?ith all the evidence sho#ing that Pepsi-s taste is s"perior, the only +"estion remaining is
ho# to add that message to Pepsi =eneration advertising. The ans#erD ,Pepsi-s got yo"r Taste for
<ifeH,, a tri"mphant celebration of great times and great taste.
1987 The soft drink market gro#s more competitive, b"t for Pepsi drinkers, the battle is #on. The
time is right and so is their soft drink. %t-s got to be ,Pepsi $o#H,
198; 3 ne# generation has emerged-in the 1nited 'tates, aro"nd the #orld and in Pepsi
advertising, too. ,Pepsi. The Choice of a $e# =eneration, anno"nces the change, and the most
pop"lar entertainer of the time, Aichael 5ackson, stars in the first t#o commercials of the ne#
campaign. The t#o spots +"ickly become ,the most eagerly a#aited advertising of all time.,
198: <ionel Eichie leads a star-st"dded parade into ,$e# =eneration, advertising follo#ed by
pop m"sic icons Tina T"rner and =loria 9stefan. 'ports heroes 5oe Aontana and .an Aarino are
part of it, as are film and television stars Teri =arr and Billy Crystal. =eraldine >erraro, the first
#oman nominated to be vice president of the 1.'., stars in a .iet Pepsi spot. 3nd the
irrepressible Aichael 5. >o( brings a special talent, style and spirit to a series of Pepsi and .iet
Pepsi commercials, incl"ding a classic, ,3partment 1/=.,
1988 3fter an absence of 08 years, Pepsi ret"rns to Times '+"are, $e# Cork,
#ith a spectac"lar 8:/-s+"are foot electronic display billboard declaring Pepsi
to be ,3merica-s Choice.,
1988 Aichael 5ackson ret"rns to ,$e# =eneration, advertising to star in a fo"r-
part ,episodic, commercial named ,Chase., ,Chase, airs d"ring the =rammy
3#ards program and is immediately hailed by the media as ,the most-#atched
commercial in advertising history.,
1989 ,The Choice of a $e# =eneration, theme e(pands to categori4e Pepsi "sers as ,3
=eneration 3headH,
199/ Teen stars >red 'avage and Firk Cameron )oin the ,$e# =eneration, campaign, and
football legend 5oe Aontana ret"rns in a spot challenging other celebrities to taste test their colas
against Pepsi. A"sic legend Eay Charles stars in a ne# .iet Pepsi campaign, ,Co" got the right
one baby.,
1991 ,Co" got the Eight one Baby, is modified to ,Co" got the Eight one Baby, 1h-*"hH, The
,1h-*"h =irls, )oin Eay Charles as back-"p singers and a campaign soon to become the most
pop"lar advertising in 3merica is on its #ay. '"permodel Cindy Cra#ford stars in an a#ard-
#inning commercial made to introd"ce Pepsi-s "pdated logo and package graphics.
1990 Celebrities )oin cons"mers, declaring that they ,=otta *ave %t., The interim campaign
s"pplants ,Choice of a $e# =eneration, as #ork proceeds on ne# Pepsi advertising for the -9/s.
Ao"ntain .e# gro#th contin"es, s"pported by the antics of an o"trageo"s ne# .e# Cre# #hose
claim to fame is that, e(cept for the "ni+"e great taste of .e#, they-ve ,Been there, .one that,
Tried that.,
1997 ,Be Co"ng, *ave f"n, .rink Pepsi, advertising starring basketball s"perstar 'ha+"ille
2-$eal is rated as best in 1.'.
199; $e# advertising introd"cing .iet Pepsi-s freshness dating initiative feat"res Pepsi C92
Craig ?eather"p e(plaining the relationship bet#een freshness and s"perior taste to cons"mers.
199: %n a ne# campaign, the company declares ,$othing else is a Pepsi, and takes top honors in
the year-s national advertising championship.
The pharmacy of Caleb Bradham, with a Pepsi dispenser, as portrayed in a New Bern
exhibition in the Historical Museum of Bern.
Pepsi #as first introd"ced as ,Brad-s .rink, in $e# Bern, $orth Carolina, in 1887 by
Caleb Bradham, #ho made it at his pharmacy #here the drink #as sold. %t #as later
named Pepsi Cola, possibly d"e to the digestive en4yme pepsin and kola n"ts "sed in the
recipe. Bradham so"ght to create a fo"ntain drink that #as delicio"s and #o"ld aid in
digestion and boost energy.
%n 19/7, Bradham moved the bottling of Pepsi-Cola from his dr"gstore to a rented
#areho"se. That year, Bradham sold 8,968 gallons of syr"p. The ne(t year, Pepsi #as
sold in si(-o"nce bottles, and sales increased to 19,8;8 gallons. %n 19/9, a"tomobile race
pioneer Barney 2ldfield #as the first celebrity to endorse Pepsi-Cola, describing it as ,3
b"lly drink...refreshing, invigorating, a fine bracer before a race., The advertising theme
,.elicio"s and *ealthf"l, #as then "sed over the ne(t t#o decades.%n 1906, Pepsi
received its first logo redesign since the original design of 19/:. %n 1909, the logo #as
changed again.
%n 1971, at the depth of the =reat .epression, the Pepsi-Cola Company entered
bankr"ptcy - in large part d"e to financial losses inc"rred by spec"lating on #ildly
fl"ct"ating s"gar prices as a res"lt of ?orld ?ar %. 3ssets #ere sold and Eoy C.
Aegargel bo"ght the Pepsi trademark.
J;K
9ight years later, the company #ent bankr"pt
again. Pepsi-s assets #ere then p"rchased by Charles ="th, the President of <oft %nc. <oft
#as a candy man"fact"rer #ith retail stores that contained soda fo"ntains. *e so"ght to
replace Coca-Cola at his stores- fo"ntains after Coke ref"sed to give him a disco"nt on
syr"p. ="th then had <oft-s chemists reform"late the Pepsi-Cola syr"p form"la.
2n three separate occasions bet#een 1900 and 1977, the Coca-Cola Company #as
offered the opport"nity to p"rchase the Pepsi-Cola company and it declined on each
occasion.
Pepsi-Cola trademark
The original stylized Pepsi-Cola logo
The second stylized Pepsi-Cola logo
The original trademark application for Pepsi-Cola #as filed on 'eptember 07, 19/0 #ith
registration approved on 5"ne 16, 19/7. %n the application-s statement, Caleb Bradham
describes the trademark as an, ,arbitrary hyphenated #ord ,P9P'%-C2<3,, and indicated
that the mark #as in contin"o"s "se for his b"siness since 3"g"st 1, 19/1. The Pepsi-
Cola-s description is a flavoring-syr"p for soda #ater. The trademark e(pired on 3pril 1:,
199;.
3 second Pepsi-Cola trademark is on record #ith the 1'PT2. The application date
s"bmitted by Caleb Bradham for the second trademark is 'at"rday, 3pril 1:, 19/: #ith
the s"ccessf"l registration date of 3pril 1:, 19/6, over three years after the original date.
C"rio"sly, in this application, Caleb Bradham states that the trademark had been
contin"o"sly "sed in his b"siness ,and those from #hom title is derived since in the 19/:
application the description s"bmitted to the 1'PT2 #as for a tonic beverage. The federal
stat"s for the 19/: trademark is registered and rene#ed and is o#ned by Pepsico, %nc. of
P"rchase, $e# Cork.
Rise
."ring the =reat .epression, Pepsi gained pop"larity follo#ing the introd"ction in 1976
of a 10-o"nce bottle. %nitially priced at 1/ cents, sales #ere slo#, b"t #hen the price #as
slashed to five cents, sales increased s"bstantially. ?ith a radio advertising campaign
feat"ring the )ingle ,Pepsi-Cola hits the spot I T#elve f"ll o"nces, that-s a lot I T#ice as
m"ch for a nickel, too I Pepsi-Cola is the drink for yo",, arranged in s"ch a #ay that the
)ingle never ends. Pepsi enco"raged price-#atching cons"mers to s#itch, obli+"ely
referring to the Coca-Cola standard of si( o"nces per bottle for the price of five cents a
nickel!, instead of the 10 o"nces Pepsi sold at the same price. Coming at a time of
economic crisis, the campaign s"cceeded in boosting Pepsi-s stat"s. >rom 1976 to 1978,
Pepsi-Cola-s profits do"bled.
Pepsi-s s"ccess "nder ="th came #hile the <oft Candy b"siness #as faltering. 'ince he
had initially "sed <oft-s finances and facilities to establish the ne# Pepsi s"ccess, the
near-bankr"pt <oft Company s"ed ="th for possession of the Pepsi-Cola company. 3
long legal battle, Guth v. Loft, then ens"ed, #ith the case reaching the .ela#are '"preme
Co"rt and "ltimately ending in a loss for ="th.
Niche marketing
1940s advertisement specifically targeting African Americans
?alter Aack #as named the ne# President of Pepsi-Cola and g"ided the company
thro"gh the 19;/s. Aack, #ho s"pported progressive ca"ses, noticed that the company-s
strategy of "sing advertising for a general a"dience either ignored 3frican 3mericans or
"sed ethnic stereotypes in portraying blacks. *e reali4ed 3frican 3mericans #ere an
"ntapped niche market and that Pepsi stood to gain market share by targeting its
advertising directly to#ards them. To this end, he hired *ennan 'mith, an advertising
e(ec"tive ,from the $egro ne#spaper field,to lead an all-black sales team, #hich had to
be c"t d"e to the onset of ?orld ?ar %%. %n 19;8, Aack res"med his efforts, hiring
9d#ard >. Boyd to lead a t#elve-man team. They came "p #ith advertising portraying
black 3mericans in a positive light, s"ch as one #ith a smiling mother holding a si( pack
of Pepsi #hile her son a yo"ng Eon Bro#n, #ho gre# "p to be 'ecretary of Commerce!
reaches "p for one. 3nother ad campaign, titled ,<eaders in Their >ields,, profiled
t#enty prominent 3frican 3mericans s"ch as $obel Peace Pri4e #inner Ealph B"nche
and photographer =ordon Parks.
Boyd also led a sales team composed entirely of blacks aro"nd the co"ntry to promote
Pepsi. Eacial segregation and 5im Cro# la#s #ere still in place thro"gho"t m"ch of the
1.'.L Boyd-s team faced a great deal of discrimination as a res"lt, from ins"lts by Pepsi
co-#orkers to threats by the F" Fl"( Flan. 2n the other hand, they #ere able to "se
racism as a selling point, attacking Coke-s rel"ctance to hire blacks and s"pport by the
chairman of Coke for segregationist =overnor of =eorgia *erman Talmadge. 3s a res"lt,
Pepsi-s market share as compared to Coke-s shot "p dramatically. 3fter the sales team
visited Chicago, Pepsi-s share in the city overtook that of Coke for the first time.
This foc"s on the market for black people ca"sed some consternation #ithin the company
and among its affiliates. They did not #ant to seem foc"sed on black c"stomers for fear
#hite c"stomers #o"ld be p"shed a#ay. %n a meeting at the ?aldorf-3storia *otel, Aack
tried to ass"age the :// bottlers in attendance by pandering to them, saying, ,?e don-t
#ant it to become kno#n as a nigger drink., 3fter Aack left the company in 19:/,
s"pport for the black sales team faded and it #as c"t.
Marketing
Pepsi logo (1970-87). In 1987, the font was modified slightly to a more rounded version
which was used until 1991. This logo was used for Pepsi Throwback in 2010.
Pepsi logo (2003-2008). Pepsi Wild Cherry and Pepsi ONE continued to use this design
through March 2010. It was outside of the U.S. until 2010. The original version had the
Pepsi wording on the top left of the Pepsi Globe. In 2007, the Pepsi wording was moved
to the bottom of the globe.
Photo of a Pepsi can with the current logo and labeling (2008 - present.)
Pepsi bottle in Mexico. This logo was still in use in Mexico and most countries through
early 2010. This Pepsi logo was last used in Canada in May 2009.
>rom the 197/s thro"gh the late 19:/s, ,Pepsi-Cola *its The 'pot, #as the most
commonly "sed slogan in the days of old radio, classic motion pict"res, and later
television. %ts )ingle conceived in the days #hen Pepsi cost only five cents! #as "sed in
many different forms #ith different lyrics.
?ith the rise of television, Pepsi "tili4ed the services of a yo"ng, "p-and-coming actress
named Polly Bergen to promote prod"cts, oftentimes lending her singing talents to the
classic ,...*its The 'pot, )ingle. 'ome of these Bergen spots can be seen on
ClassicTG3ds.com.
Thro"gh the intervening decades, there have been many different Pepsi theme songs s"ng
on television by a variety of artists, from 5oanie '"mmers to The 5acksons to Britney
'pears. 'ee 'logans!
%n 198:, Pepsi introd"ced the Pepsi Challenge marketing campaign #here PepsiCo set "p
a blind tasting bet#een Pepsi-Cola and rival Coca-Cola. ."ring these blind taste tests the
ma)ority of participants picked Pepsi as the better tasting of the t#o soft drinks. PepsiCo
took great advantage of the campaign #ith television commercials reporting the res"lts to
the p"blic.
%n 1986 Pepsi, EF2 Bottlers in Toledo, 2hio hired the first female Pepsi salesperson,
.enise A"ck, to coincide #ith the 1nited 'tates bicentennial celebration.
%n 1998, PepsiCo la"nched the highly s"ccessf"l Pepsi 't"ff marketing strategy. By 0//0,
the strategy #as cited by Promo Aaga4ine as one of 16 ,3geless ?onders, that ,helped
redefine promotion marketing.,
%n 0//8, PepsiCo redesigned their cans for the fo"rteenth time, and for the first time,
incl"ded more than thirty different backgro"nds on each can, introd"cing a ne#
backgro"nd every three #eeks. 2ne of their backgro"nd designs incl"des a string of
repetitive n"mbers, ,8788;,. This is a n"merical e(pression from a telephone keypad of
the #ord ,Pepsi.,
%n late 0//8, Pepsi overha"led their entire brand, sim"ltaneo"sly introd"cing a ne# logo
and a minimalist label design. The redesign #as comparable to Coca-Cola-s earlier
simplification of their can and bottle designs. 3lso in 0//8 Pepsi teamed "p #ith
=oogleICo"T"be to prod"ce the first daily entertainment sho# on Co"t"be, Popt"b. This
daily sho# deals #ith pop c"lt"re, internet viral videos, and celebrity gossip. Popt"b is
"pdated daily from Pepsi.
%n 0//9, ,Bring *ome the C"p,, changed to ,Team 1p and Bring *ome the C"p., The
ne# installment of the campaign asks for team involvement and an advocate to s"bmit
content on behalf of their team for the chance to have the 'tanley C"p delivered to the
team-s hometo#n by Aark Aessier.
Pepsi has official sponsorship deals #ith three of the fo"r ma)or $orth 3merican
professional sports leag"es& the $ational >ootball <eag"e, $ational *ockey <eag"e and
Aa)or <eag"e Baseball. Pepsi also sponsors Aa)or <eag"e 'occer.
Pepsi also has sponsorship deals in international cricket teams. The Pakistan cricket team
is one of the teams that the brand sponsors. The team #ears the Pepsi logo on the front of
their test and 2.% test match clothing.
2n 5"ly 6, 0//9, Pepsi anno"nced it #o"ld make a @1 billion investment in E"ssia over
three years, bringing the total Pepsi investment in the co"ntry to @; billion.
%n 5"ly 0//9, Pepsi started marketing itself as Pecsi in 3rgentina in response to its name
being misprono"nced by 0:M of the pop"lation and as a #ay to connect more #ith all of
the pop"lation.
%n 2ctober 0//8, Pepsi anno"nced that it #o"ld be redesigning its logo and re-branding
many of its prod"cts by early 0//9. %n 0//9, Pepsi, .iet Pepsi and Pepsi Aa( began
"sing all lo#er-case fonts for name brands, and .iet Pepsi Aa( #as re-branded as Pepsi
Aa(. The brand-s bl"e and red globe trademark became a series of ,smiles,, #ith the
central #hite band arcing at different angles depending on the prod"ct "ntil 0/1/. Pepsi
released this logo in 1.'. in late 0//8, and later it #as released in 0//9 in Canada the
first co"ntry o"tside of the 1nited 'tates for Pepsi-s ne# logo!, Bra4il, Bolivia,
="atemala, $icarag"a, *ond"ras, 9l 'alvador, Colombia, 3rgentina, P"erto Eico, Costa
Eica, Panama, Chile, .ominican Eep"blic, the Philippines and 3"straliaL in the rest of
the #orld the ne# logo has been released in 0/1/, meaning the old logo has been phased
o"t entirely most recently, >rance and Ae(ico s#itched to Pepsi-s c"rrent logo!. The 1F
started to "se the ne# Pepsi logo on cans in an order different from the 1' can. %n mid-
0/1/, all Pepsi variants, reg"lar, diet, and Pepsi Aa(, have started "sing only the
medi"m-si4ed ,smile, Pepsi =lobe.
Pepsi and Pepsi Aa( cans and bottles in 3"stralia no# carry the locali4ed version of the
ne# Pepsi <ogo. The #ord Pepsi and the logo are in the ne# style, #hile the #ord ,Aa(,
is still in the previo"s style. Pepsi ?ild Cherry finally received the 0//8 Pepsi design in
Aarch 0/1/.
Rivalry with Coca-Cola
Main article: Cola Wars
3ccording to Cons"mer Eeports, in the 198/s, the rivalry contin"ed to heat "p the
market. Pepsi cond"cted blind taste tests in stores, in #hat #as called the ,Pepsi
Challenge,. These tests s"ggested that more cons"mers preferred the taste of Pepsi
#hich is believed to have more lemon oil, less orange oil, and "ses vanillin rather than
vanilla! to Coke. The sales of Pepsi started to climb, and Pepsi kicked off the ,Challenge,
across the nation. This became kno#n as the ,Cola ?ars,.
%n 198:, The Coca-Cola Company, amid m"ch p"blicity, changed its form"la. The theory
has been advanced that $e# Coke, as the reform"lated drink came to be kno#n, #as
invented specifically in response to the Pepsi Challenge. *o#ever, a cons"mer backlash
led to Coca-Cola +"ickly reintrod"cing the original form"la as Coke ,Classic,.
3ccording to Beverage Digest's 0//8 report on carbonated soft drinks, PepsiCo-s 1.'.
market share is 7/.8 percent, #hile The Coca-Cola Company-s is ;0.8 percent.
J18K
Coca-
Cola o"tsells Pepsi in most parts of the 1.'., notable e(ceptions being central
3ppalachia, $orth .akota, and 1tah. %n the city of B"ffalo, $e# Cork, Pepsi o"tsells
Coca-Cola by a t#o-to-one margin.
J18K
2verall, Coca-Cola contin"es to o"tsell Pepsi in almost all areas of the #orld. *o#ever,
e(ceptions incl"de %ndiaL 'a"di 3rabiaL Pakistan Pepsi has been a dominant sponsor of
the Pakistan cricket team since the 199/s!L the .ominican Eep"blicL ="atemala the
Canadian provinces of N"ebec, $e#fo"ndland and <abrador, $ova 'cotia, and Prince
9d#ard %slandL and $orthern 2ntario.
J19K
Pepsi had long been the drink of Canadian >rancophones and it contin"es to hold its
dominance by relying on local N"ObOcois celebrities especially Cla"de Ae"nier, of La
Petite Vie fame! to sell its prod"ct.
J0/K
PepsiCo "se the slogan ,here, it-s Pepsi, %ci, c-est
Pepsi! to ans#er to Coca-cola p"blicity ,9very#here in the #orld, it-s Coke, Parto"t
dans le monde, c-est Coke!.
By most acco"nts, Coca-Cola #as %ndia-s leading soft drink "ntil 1988 #hen it left %ndia
after a ne# government ordered The Coca-Cola Company to t"rn over its secret form"la
for Coke and dil"te its stake in its %ndian "nit as re+"ired by the >oreign 9(change
Eeg"lation 3ct >9E3!. %n 1988, PepsiCo gained entry to %ndia by creating a )oint
vent"re #ith the P"n)ab government-o#ned P"n)ab 3gro %nd"strial Corporation P3%C!
and Goltas %ndia <imited. This )oint vent"re marketed and sold <ehar Pepsi "ntil 1991
#hen the "se of foreign brands #as allo#edL PepsiCo bo"ght o"t its partners and ended
the )oint vent"re in 199;. %n 1997, The Coca-Cola Company ret"rned in p"rs"ance of
%ndia-s <iberali4ation policy.
J01K
%n 0//:, The Coca-Cola Company and PepsiCo together
held 9:M market share of soft-drink sales in %ndia. Coca-Cola %ndia-s market share #as
:0.:M.
J00K
%n E"ssia, Pepsi initially had a larger market share than Coke b"t it #as "nderc"t once the
Cold ?ar ended. %n 1980, PepsiCo company str"ck a barter agreement #ith the then
government of the 'oviet 1nion, in #hich PepsiCo #as granted e(portation and ?estern
marketing rights to 'tolichnaya vodka in e(change for importation and 'oviet marketing
of Pepsi-Cola.
J07K

J0;K
This e(change led to Pepsi-Cola being the first foreign prod"ct
sanctioned for sale in the 1.'.'.E.
J0:K
Eeminiscent of the #ay that Coca-Cola became a c"lt"ral icon and its global spread
spa#ned #ords like ,coca coloni4ation,, Pepsi-Cola and its relation to the 'oviet system
t"rned it into an icon. %n the early 199/s, the term ,Pepsi-stroika, began appearing as a
p"n on ,perestroika,, the reform policy of the 'oviet 1nion "nder Aikhail =orbachev.
Critics vie#ed the policy as a lot of fi44 #itho"t s"bstance and as an attempt to "sher in
?estern prod"cts in deals there #ith the old elites. Pepsi, as one of the first 3merican
prod"cts in the 'oviet 1nion, became a symbol of that relationship and the 'oviet policy.
This #as reflected in E"ssian a"thor Gictor Pelevin-s book ,=eneration P,.
%n 1989, Billy 5oel mentioned the rivalry bet#een the t#o companies in the song ,?e
.idn-t 'tart The >ire,. The line ,Eock B Eoll and Cola ?ars, refers to Pepsi and Coke-s
"sage of vario"s m"sicians in their advertising campaigns. Coke "sed Pa"la 3bd"l, #hile
Pepsi "sed Aichael 5ackson. They then contin"ed to try to get other m"sicians to
advertise their beverages.
%n 1990, follo#ing the 'oviet collapse, Coca-Cola #as introd"ced to the E"ssian market.
3s it came to be associated #ith the ne# system, and Pepsi to the old, Coca-Cola rapidly
capt"red a significant market share that might other#ise have re+"ired years to achieve.
By 5"ly 0//:, Coca-Cola en)oyed a market share of 19.; percent, follo#ed by Pepsi #ith
17 percent.
J08K
Pepsi did not sell soft drinks in %srael "ntil 1991. Aany %sraelis and some 3merican
5e#ish organi4ations attrib"ted Pepsi-s previo"s rel"ctance to do battle to the 3rab
boycott. Pepsi, #hich has a large and l"crative b"siness in the 3rab #orld, denied that,
saying that economic, rather than political, reasons kept it o"t of %srael.
J08K
Slogans
Old Pepsi can with "rounded" logo version (1987-1991).
Old logo still in use in Pepsi cans made in Pakistan.
A large advertisement made to resemble a Pepsi cup at Nickelodeon Universe in the Mall
of America.
19391950: "Twice as Much for a Nickel"
1950: "More Bounce to the Ounce"
19501957: "Any Weather is Pepsi Weather"
19571958: "Say Pepsi, Please"
19581961: "Be Sociable, Have a Pepsi"
1961-1963: "Now It's Pepsi for Those Who Think Young" (jingle sung by Joanie
Sommers)
19631967: "Come Alive, You're in the Pepsi Generation" (jingle sung by Joanie
Sommers)
19671969: "(Taste that beats the others cold) Pepsi Pours It On".
19691975: "You've Got a Lot to Live, and Pepsi's Got a Lot to Give"
19751977: "Have a Pepsi Day"
19771980: "Join the Pepsi People (Feeling Free)"
19801981: "Catch That Pepsi Spirit" (David Lucas, composer)
19811983: "Pepsi's got your taste for life"
1983: "It's cheaper than Coke!"
19831984: "Pepsi Now! Take the Challenge!"
19841991: "Pepsi. The Choice of a New Generation" (commercial with Michael
Jackson and The Jacksons, featuring Pepsi version of Billie Jean)
1984-1988: "Diet Pepsi. The Choice of a New Generation"
1988-1989: "Diet Pepsi. The Taste That's Generations Ahead"
1989-1990: "Diet Pepsi. The Right One"
1989-1992: "Diet Pepsi. The Taste That Beats Diet Coke"
19861987: "We've Got The Taste" (commercial with Tina Turner)
19871990: "Pepsi's Cool" (commercial with Michael Jackson, featuring Pepsi
version of Bad)
19901991: "You got the right one Baby UH HUH" (sung by Ray Charles for
Diet Pepsi)
19901991: "Yehi hai right choice Baby UH HUH" (Hindi - meaning "This is the
right choice Baby UH HUH") (India)
19911992: "Gotta Have It"/"Chill Out"
19921993: "Be Young, Have Fun, Drink Pepsi"
19931994: "Right Now" (Van Halen song for the Crystal Pepsi advertisement)
19941995: "Double Dutch Bus" (Pepsi song sung by Brad Bentz)
1995: "Nothing Else is a Pepsi"
19951996: "Drink Pepsi. Get Stuff." Pepsi Stuff campaign
19961997: "Pepsi: There's nothing official about it" (During the Wills World
Cup (cricket) held in India/Pakistan/Sri Lanka)
19971998: "Generation Next" (with the Spice Girls)
19981999: "It's the cola" (100th anniversary commercial)
19992000: "For Those Who Think Young"/"The Joy of Pepsi-Cola"
(commercial with Britney Spears/commercial with Mary J. Blige)
1999-2006: "Yeh dil maange more" (Hindi - meaning "This heart asks for more")
(India)
2003: "It's the Cola"/"Dare for More" (Pepsi Commercial)
20062007: "Why You Doggin' Me"/"Taste the one that's forever young" (Mary
J. Blige)
20072008: "More Happy"/"Taste the once that's forever young" (Michael
Alexander)
2008present: "pepsi ye pyaas heh bari" ((urdu) meaning "it killed my thirst"
(pakistan))
2008: "Pepsi Stuff" Super Bowl Commercial (Justin Timberlake)
2008: " epsi is #1" v commercial (Luke Rosin)
2008present: "Something For Everyone"
2009present: "Refresh Everything"/"Every Generation Refreshes the World"
2009present: "Yeh hai youngistaan meri jaan" (Hindi - meaning "This is our
young country my baby")
2009present: "My Pepsi My Way"(India)
2009present: "Refresca tu Mundo" (Spanish - meaning "Refresh your world")
(Spanish Spoken countries in Latin America)
2010present: "Every Pepsi Refreshes The World"
2010present "Pepsi. Sarap Magbago." (Philippines - meaning "It's nice to
change")
2010present "Badal Do Zamana" (Urdu - meaning "Change The World")
(Pakistan)
Pepsiman
Pepsiman is an official Pepsi mascot from Pepsi-s 5apanese corporate branch. The design
of the Pepsiman character is attrib"ted to Canadian comic book artist Travis Charest,
created sometime aro"nd the mid 199/s. Pepsiman took on three different o"tfits, each
one representing the c"rrent style of the Pepsi can in distrib"tion. T#elve commercials
#ere created feat"ring the character. *is role in the advertisements is to appear #ith
Pepsi to thirsty people or people craving soda. Pepsiman happens to appear at )"st the
right time #ith the prod"ct. 3fter delivering the beverage, sometimes Pepsiman #o"ld
enco"nter a diffic"lt and action oriented sit"ation #hich #o"ld res"lt in in)"ry.
%n 1996, 'ega-3A0 released the 'ega 'at"rn version of their arcade fighting game
Fighting Vipers. %n this game Pepsiman #as incl"ded as a special character, #ith his
specialty listed as being the ability to ,+"ench one-s thirst,. *e does not appear in any
other version or se+"el. %n 1999, F%. developed a video game for the PlayStation entitled
Pepsiman. 3s Pepsiman, the player r"ns, skateboards, rolls, and st"mbles thro"gh
vario"s areas, avoiding dangers and collecting cans of Pepsi all #hile trying to reach a
thirsty person as in the commercials.
Variants
Main article: List of Pepsi variations
Ingredients
%n the 1nited 'tates, Pepsi is made #ith carbonated #ater, high fr"ctose corn syr"p,
caramel color, s"gar, Phosphoric acid, caffeine, citric acid and nat"ral flavors. 3 can of
Pepsi 10 fl o"nces! has ;1 grams of carbohydrates all from s"gar!, 7/ mg of sodi"m,
/ grams of fat, / grams of protein, 78 mg of caffeine and 1:/ calories.
J09KJ7/K
The caffeine-
free Pepsi-Cola contains the same ingredients b"t #itho"t the caffeine.
The original Pepsi-Cola recipe #as available from doc"ments filed #ith the co"rt at the
time that the Pepsi-Cola Company #ent bankr"pt in 1909. The original form"la
contained neither cola nor caffeine.
Jcitation neededK
COCA COA HIS!OR"
Coca-Cola is a carbonated soft drink sold in the stores, resta"rants, and vending
machines of more than 0// co"ntries.
J1K
%t is prod"ced by The Coca-Cola Company of
3tlanta, =eorgia, and is often referred to simply as Co#e a registered trademark of The
Coca-Cola Company in the 1nited 'tates since Aarch 08, 19;;!. 2riginally intended as a
patent medicine #hen it #as invented in the late 19th cent"ry by 5ohn Pemberton, Coca-
Cola #as bo"ght o"t by b"sinessman 3sa =riggs Candler, #hose marketing tactics led
Coke to its dominance of the #orld soft-drink market thro"gho"t the 0/th cent"ry.
The company prod"ces concentrate, #hich is then sold to licensed Coca-Cola bottlers
thro"gho"t the #orld. The bottlers, #ho hold territorially e(cl"sive contracts #ith the
company, prod"ce finished prod"ct in cans and bottles from the concentrate in
combination #ith filtered #ater and s#eeteners. The bottlers then sell, distrib"te and
merchandise Coca-Cola to retail stores and vending machines. '"ch bottlers incl"de
Coca-Cola 9nterprises, #hich is the largest single Coca-Cola bottler in $orth 3merica
and #estern 9"rope. The Coca-Cola Company also sells concentrate for soda fo"ntains to
ma)or resta"rants and food service distrib"tors.
The Coca-Cola Company has, on occasion, introd"ced other cola drinks "nder the Coke
brand name. The most common of these is .iet Coke, #ith others incl"ding Caffeine-
>ree Coca-Cola, .iet Coke Caffeine->ree, Coca-Cola Cherry, Coca-Cola Pero, Coca-
Cola Ganilla, and special editions #ith lemon, lime or coffee.
%n response to cons"mer insistence on a more nat"ral prod"ct, the company is in the
process of phasing o"t 9011, or sodi"m ben4oate, the controversial additive "sed in .iet
Coke and linked to .$3 damage in yeast cells and hyperactivity in children. The
company has stated that it plans to remove 9011 from its other prod"cts, incl"ding 'prite
and 2asis, as soon as a satisfactory alternative is fo"nd.
J0K
The prototype Coca-Cola recipe #as form"lated at the 9agle .r"g and Chemical
Company, a dr"gstore in Col"mb"s, =eorgia by 5ohn Pemberton, originally as a coca
#ine called Pemberton-s >rench ?ine Coca.
J7KJ;K
*e may have been inspired by the
formidable s"ccess of Gin Aariani, a 9"ropean coca #ine.
J:K
%n 1886, #hen 3tlanta and >"lton Co"nty passed prohibition legislation, Pemberton
responded by developing Coca-Cola, essentially a non-alcoholic version of >rench ?ine
Coca.
J6K
The first sales #ere at 5acob-s Pharmacy in 3tlanta, =eorgia, on Aay 8, 1886.
J8K
%t
#as initially sold as a patent medicine for five cents
J8K
a glass at soda fo"ntains, #hich
#ere pop"lar in the 1nited 'tates at the time d"e to the belief that carbonated #ater #as
good for the health.
J9K
Pemberton claimed Coca-Cola c"red many diseases, incl"ding
morphine addiction, dyspepsia, ne"rasthenia, headache, and impotence. Pemberton ran
the first advertisement for the beverage on Aay 09 of the same year in the Atlanta
Journal.
J1/K
By 1888, three versions of Coca-Cola Q sold by three separate b"sinesses Q #ere on the
market. 3sa =riggs Candler ac+"ired a stake in Pemberton-s company in 1888 and
incorporated it as the Coca Cola Company in 1888.
J11K
The same year, #hile s"ffering
from an ongoing addiction to morphine,
J10K
Pemberton sold the rights a second time to
fo"r more b"sinessmen& 5.C. Aayfield, 3.2. A"rphey, C.2. A"llahy and 9.*.
Blood#orth. Aean#hile, Pemberton-s alcoholic
J17K
son Charley Pemberton began selling
his o#n version of the prod"ct.
J1;K
5ohn Pemberton declared that the nae ,Coca-Cola, belonged to Charley, b"t the other
t#o man"fact"rers co"ld contin"e to "se the forula. 'o, in the s"mmer of 1888, Candler
sold his beverage "nder the names C"m C"m and Foke. 3fter both failed to catch on,
Candler set o"t to establish a legal claim to Coca-Cola in late 1888, in order to force his
t#o competitors o"t of the b"siness. Candler p"rchased e(cl"sive rights to the form"la
from 5ohn Pemberton, Aargaret .o4ier and ?oolfolk ?alker. *o#ever, in 191;, .o4ier
came for#ard to claim her signat"re on the bill of sale had been forged, and s"bse+"ent
analysis has indicated 5ohn Pemberton-s signat"re #as most likely a forgery as #ell.
J1:K
Old German Coca-Cola bottle opener
%n 1890 Candler incorporated a second company, !he Coca-Cola Company the c"rrent
corporation!, and in 191/ Candler had the earliest records of the company b"rned, f"rther
obsc"ring its legal origins. By the time of its :/th anniversary, the drink had reached the
stat"s of a national icon in the 1'3. %n 197:, it #as certified kosher by Eabbi Tobias
=effen, after the company made minor changes in the so"rcing of some ingredients.
J16K
Coca-Cola #as sold in bottles for the first time on Aarch 10, 189;. The first o"tdoor #all
advertisement #as painted in the same year as #ell in Cartersville, =eorgia.
J18K
Cans of
Coke first appeared in 19::.
J18K
The first bottling of Coca-Cola occ"rred in Gicksb"rg,
Aississippi, at the Biedenharn Candy Company in 1891. %ts proprietor #as 5oseph 3.
Biedenharn. The original bottles #ere Biedenharn bottles, very different from the m"ch
later hobble-skirt design that is no# so familiar. 3sa Candler #as tentative abo"t bottling
the drink, b"t t#o entreprene"rs from Chattanooga, Tennessee, Ben)amin >. Thomas and
5oseph B. ?hitehead, proposed the idea and #ere so pers"asive that Candler signed a
contract giving them control of the proced"re for only one dollar. Candler never collected
his dollar, b"t in 1899 Chattanooga became the site of the first Coca-Cola bottling
company.
J19K
The loosely termed contract proved to be problematic for the company for
decades to come. <egal matters #ere not helped by the decision of the bottlers to
s"bcontract to other companies, effectively becoming parent bottlers.
J0/K
Coke concentrate, or Coke syr"p, #as and is sold separately at pharmacies in small
+"antities, as an over-the-co"nter remedy for na"sea or mildly "pset stomach.
$ew Co#e
Main article: New Coke
Coca-Cola sign in Colorado City, Texas
2n 3pril 07, 198:, Coca-Cola, amid m"ch p"blicity, attempted to change the form"la of
the drink #ith ,$e# Coke,. >ollo#-"p taste tests revealed that most cons"mers preferred
the taste of $e# Coke to both Coke and Pepsi, b"t Coca-Cola management #as
"nprepared for the p"blic-s nostalgia for the old drink, leading to a backlash. The
company gave in to protests and ret"rned to a variation of the old form"la, "nder the
name Coca-Cola Classic on 5"ly 1/, 198:.
%&st Cent'ry
2n >ebr"ary 8, 0//:, the Coca-Cola Company anno"nced that in the second +"arter of
0//: they planned to la"nch a .iet Coke prod"ct s#eetened #ith the artificial s#eetener
s"cralose, the same s#eetener c"rrently "sed in Pepsi 2ne.
J01KJ00K
2n Aarch 01, 0//:, it
anno"nced another diet prod"ct, Coca-Cola Pero, s#eetened partly #ith a blend of
aspartame and aces"lfame potassi"m.
J07K
%n 0//8, Coca-Cola began to sell a ne# ,healthy
soda,& .iet Coke #ith vitamins B
6
, B
10
, magnesi"m, niacin, and 4inc, marketed as ,.iet
Coke Pl"s.,
2n 5"ly :, 0//:, it #as revealed that Coca-Cola #o"ld res"me operations in %ra+ for the
first time since the 3rab <eag"e boycotted the company in 1968.
J0;K
%n 3pril 0//8, in Canada, the name ,Coca-Cola Classic, #as changed back to ,Coca-
Cola., The #ord ,Classic, #as tr"ncated beca"se ,$e# Coke, #as no longer in
prod"ction, eliminating the need to differentiate bet#een the t#o.
J0:K
The form"la
remained "nchanged.
%n 5an"ary 0//9, Coca-Cola stopped printing the #ord ,Classic, on the labels of 16-
o"nce bottles sold in parts of the so"theastern 1nited 'tates.
J06K
The change is part of a
larger strategy to re)"venate the prod"ct-s image.
J06K
%n $ovember 0//9, d"e to a disp"te over #holesale prices of Coca-Cola prod"cts, Costco
stopped restocking its shelves #ith Coke and .iet Coke.
J08K
Use of stimulants in formula
?hen la"nched Coca-Cola-s t#o key ingredients #ere cocaine ben4oylmethyl ecgonine!
and caffeine. The cocaine #as derived from the coca leaf and the caffeine from kola n"t,
leading to the name Coca-Cola the ,F, in Fola #as replaced #ith a ,C, for marketing
p"rposes!.
J08KJ09K
Coca ( cocaine
Pemberton called for five o"nces of coca leaf per gallon of syr"p, a significant doseL in
1891, Candler claimed his form"la altered e(tensively from Pemberton-s original!
contained only a tenth of this amo"nt. Coca-Cola did once contain an estimated nine
milligrams of cocaine per glass, b"t in 19/7 it #as removed.
J7/K
Coca-Cola still contains
coca flavoring.
3fter 19/;, instead of "sing fresh leaves, Coca-Cola started "sing ,spent, leaves Q the
leftovers of the cocaine-e(traction process #ith cocaine trace levels left over at a
molec"lar level.
J71K
To this day, Coca-Cola "ses as an ingredient a cocaine-free coca leaf
e(tract prepared at a 'tepan Company plant in Aay#ood, $e# 5ersey.
%n the 1nited 'tates, 'tepan Company is the only man"fact"ring plant a"thori4ed by the
>ederal =overnment to import and process the coca plant,
J70K
#hich it obtains mainly
from Per" and, to a lesser e(tent, Bolivia. Besides prod"cing the coca flavoring agent for
Coca-Cola, 'tepan Company e(tracts cocaine from the coca leaves, #hich it sells to
Aallinckrodt, a 't. <o"is, Aisso"ri pharmace"tical man"fact"rer that is the only
company in the 1nited 'tates licensed to p"rify cocaine for medicinal "se.
J77K
)ola n'ts ( caffeine
Fola n"ts act as a flavoring and the so"rce of caffeine in Coca-Cola. %n Britain, for
e(ample, the ingredient label states ,>lavo"rings %ncl"ding Caffeine!.,
J7;K
Fola n"ts
contain abo"t 0 percent to 7.: percent caffeine, are of bitter flavor and are commonly
"sed in cola soft drinks. %n 1911, the 1.'. government initiated 1nited 'tates v. >orty
Barrels and T#enty Fegs of Coca-Cola, hoping to force Coca-Cola to remove caffeine
from its form"la. The case #as decided in favor of Coca-Cola. '"bse+"ently, in 1910 the
1.'. P"re >ood and .r"g 3ct #as amended, adding caffeine to the list of ,habit-forming,
and ,deleterio"s, s"bstances #hich m"st be listed on a prod"ct-s label.
Coca-Cola contains ;6 mg of caffeine per 10 fl"id o"nces, #hile Caffeine->ree Coca-
Cola and .iet Coke Caffeine->ree contain / mg.
J7:K
Production
Coca-Cola 375 mL 24 can pack (AU)
Ingre*ients
Carbonated water
Sugar (sucrose or high-fructose corn syrup depending on country of origin)
Caffeine
Phosphoric acid v. Caramel (E150d)
Natural flavorings
[36]
3 can of Coke 10 fl o"ncesI7:: ml! has 79 grams of carbohydrates all from s"gar,
appro(imately 1/ teaspoons!,
J78K
:/ mg of sodi"m, / grams fat, / grams potassi"m, and
1;/ calories.
J78K
Form'la of nat'ral flavorings
Main article: Coca-Cola formula
The e(act form"la of Coca-Cola-s nat"ral flavo"rings b"t not its other ingredients #hich
are listed on the side of the bottle or can! is a trade secret. The original copy of the
form"la is held in '"nTr"st Bank-s main va"lt in 3tlanta. %ts predecessor, the Tr"st
Company, #as the "nder#riter for the Coca-Cola Company-s initial p"blic offering in
1919. 3 pop"lar myth states that only t#o e(ec"tives have access to the form"la, #ith
each e(ec"tive having only half the form"la.
J79K
The tr"th is that #hile Coca-Cola does
have a r"le restricting access to only t#o e(ec"tives, each kno#s the entire form"la and
others, in addition to the prescribed d"o, have kno#n the form"lation process.
J;/K
Franchise* pro*'ction mo*el
The act"al prod"ction and distrib"tion of Coca-Cola follo#s a franchising model. The
Coca-Cola Company only prod"ces a syr"p concentrate, #hich it sells to bottlers
thro"gho"t the #orld, #ho hold Coca-Cola franchises for one or more geographical areas.
The bottlers prod"ce the final drink by mi(ing the syr"p #ith filtered #ater and
s#eeteners, and then carbonate it before p"tting it in cans and bottles, #hich the bottlers
then sell and distrib"te to retail stores, vending machines, resta"rants and food service
distrib"tors.
J;1K
The Coca-Cola Company o#ns minority shares in some of its largest franchises, like
Coca-Cola 9nterprises, Coca-Cola 3matil, Coca-Cola *ellenic Bottling Company
CC*BC! and Coca-Cola >9A'3, b"t f"lly independent bottlers prod"ce almost half of
the vol"me sold in the #orld. %ndependent bottlers are allo#ed to s#eeten the drink
according to local tastes.
J;0K
The bottling plant in 'kop)e, Aacedonia, received the 0//9 a#ard for ,Best Bottling
Company,.
J;7K
Brand portfolio
Name Launched Discontinued Notes Picture
Coca-Cola 1886 The original version of Coca-Cola.
Caffeine-Free
Coca-Cola
1983
The caffeine free version of Coca-
Cola.
Coca-Cola
Cherry
1985 Was available in Canada starting in
1996. Called "Cherry Coca-Cola
(Cherry Coke)" in North America
until 2006. Zero-calorie variant
(Coca-Cola Cherry Zero) also
currently available.
New
Coke/"Coca-
Cola II"
1985 2002
Still available in Yap and American
Samoa
Coca-Cola
with Lemon
2001 2005
Still available in:
3merican 'amoa, 3"stria, Belgi"m,
Bra4il, China, .enmark, >ederation
of Bosnia and *er4egovina,
>inland, >rance, =ermany, *ong
Fong, %celand, Forea, <"(embo"rg,
Aaca", Aalaysia, Aongolia,
$etherlands, $or#ay, EO"nion,
'ingapore, 'pain, '#it4erland,
Tai#an, T"nisia, 1nited Fingdom,
1nited 'tates, and ?est Bank-=a4a
Coca-Cola
Vanilla
2002 2005
Still available in:
3"stria, 3"stralia, China, =ermany,
*ong Fong, $e# Pealand 6// m<
only! Aalaysia, '#eden %mported!
and E"ssia. ?as called ,Ganilla
Coca-Cola Ganilla Coke!, d"ring
initial 1.'. availability.
2007
It was reintroduced in June 2007 by
popular demand
Coca-Cola C2 2003 2007
Was only available in Japan,
Canada, and the United States.
Coca-Cola
with Lime
2005
Available in Belgium, Netherlands,
Singapore, Canada, the United
Kingdom, and the United States.
Coca-Cola
Raspberry
June 2005 End of 2005 Was only available in New Zealand.
Coca-Cola
Zero
2005
Coca-Cola M5 2005
Only available in Federation of
Bosnia and Herzegovina, Germany,
Italy, Spain, Mexico and Brazil
Coca-Cola
Black Cherry
Vanilla
2006
Middle of
2007
Was replaced by Vanilla Coke in
June 2007
Coca-Cola
Bl k
2006
Beginning of
2008
Only available in the United States,
France, Canada, Czech Republic,
Slovak Republic, Federation of
Bosnia and Herzegovina, Bulgaria
and Lithuania
Coca-Cola
Citra
2006
Only available in Federation of
Bosnia and Herzegovina, New
Zealand and Japan.
Coca-Cola
Light Sango
2006
Only available in France and
Belgium.
Coca-Cola
Orange
2007
Only available in the United
Kingdom and Gibraltar
ogo *esign
Detail on Elmira Coca-Cola Bottling Plant, Elmira, NY.
The famo"s Coca-Cola logo #as created by 5ohn Pemberton-s bookkeeper, >rank Aason
Eobinson, in 188:.
J;;K
Eobinson came "p #ith the name and chose the logo-s distinctive
c"rsive script. The typeface "sed, kno#n as 'pencerian script, #as developed in the mid
19th cent"ry and #as the dominant form of formal hand#riting in the 1nited 'tates
d"ring that period.
Eobinson also played a significant role in early Coca-Cola advertising. *is promotional
s"ggestions to Pemberton incl"ded giving a#ay tho"sands of free drink co"pons and
plastering the city of 3tlanta #ith p"blicity banners and streetcar signs.
J;:K
Conto'r +ottle *esign
Earl R. Dean's original 1915 concept drawing of the contour Coca-Cola bottle.
The prototype never made it to production since its middle diameter was larger than its
base, making it unstable on conveyor belts.
The e+"ally famo"s Coca-Cola bottle, called the ,conto"r bottle, #ithin the company, b"t
kno#n to some as the ,hobble skirt, bottle, #as created in 191: by bottle designer 9arl E.
.ean. %n 191:, the Coca-Cola Company la"nched a competition among its bottle
s"ppliers to create a ne# bottle for the beverage that #o"ld disting"ish it from other
beverage bottles, ,a bottle #hich a person co"ld recogni4e even if they felt it in the dark,
and so shaped that, even if broken, a person co"ld tell at a glance #hat it #as.,
J;6K
Chapman 5. Eoot, president of the Eoot =lass Company, t"rned the pro)ect over to
members of his s"pervisory staff, incl"ding company a"ditor T. Clyde 9d#ards, plant
s"perintendent 3le(ander 'am"elsson, and 9arl E. .ean, bottle designer and s"pervisor
of the bottle molding room. Eoot and his s"bordinates decided to base the bottle-s design
on one of the soda-s t#o ingredients, the coca leaf or the kola n"t, b"t #ere "na#are of
#hat either ingredient looked like. .ean and 9d#ards #ent to the 9meline >airbanks
Aemorial <ibrary and #ere "nable to find any information abo"t coca or kola. %nstead,
.ean #as inspired by a pict"re of the go"rd-shaped cocoa pod in the 9ncyclopedia
Britannica. .ean made a ro"gh sketch of the pod and ret"rned back to the plant to sho#
Ar. Eoot. *e e(plained to Eoot ho# he co"ld transform the shape of the pod into a
bottle. Chapman Eoot gave .ean his approval.
J;6K
>aced #ith the "pcoming sched"led maintenance of the mold-making machinery, over
the ne(t 0; ho"rs .ean sketched o"t a concept dra#ing #hich #as approved by Eoot the
ne(t morning. .ean then proceeded to create a bottle mold and prod"ced a small n"mber
of bottles before the glass-molding machinery #as t"rned off.
J;8K
Chapman Eoot approved the prototype bottle and a design patent #as iss"ed on the bottle
in $ovember, 191:. The prototype never made it to prod"ction since its middle diameter
#as larger than its base, making it "nstable on conveyor belts. .ean resolved this iss"e
by decreasing the bottle-s middle diameter. ."ring the 1916 bottler-s convention, .ean-s
conto"r bottle #as chosen over other entries and #as on the market the same year. By
190/, the conto"r bottle became the standard for the Coca-Cola Company. Today, the
conto"r Coca-Cola bottle is one of the most recogni4ed packages on the planet...,even in
the darkH,.
3s a re#ard for his efforts, .ean #as offered a choice bet#een a @:// bon"s or a lifetime
)ob at the Eoot =lass Company. *e chose the lifetime )ob and kept it "ntil the 2#ens-
%llinois =lass Company bo"ght o"t the Eoot =lass Company in the mid-197/s. .ean
#ent on to #ork in other Aid#estern glass factories.
3ltho"gh endorsed by some
J"ho#K
, this version of events is not considered a"thoritative by
many
J"ho#K
#ho consider it impla"sible. 2ne alternative depiction has Eaymond <oe#y as
the inventor of the "ni+"e design, b"t, #hile <oe#y did serve as a designer of Coke cans
and bottles in later years, he #as in the >rench 3rmy the year the bottle #as invented and
did not emigrate to the 1nited 'tates "ntil 1919. 2thers have attrib"ted inspiration for the
design not to the cocoa pod, b"t to a Gictorian hooped dress.
%n 19;;, 3ssociate 5"stice Eoger 5. Traynor of the '"preme Co"rt of California took
advantage of a case involving a #aitress in)"red by an e(ploding Coca-Cola bottle to
artic"late the doctrine of strict liability for defective prod"cts. Traynor-s conc"rring
opinion in $scola v. %oca&%ola Bottling %o. is #idely recogni4ed as a landmark case in
1.'. la# today.
J:/K
%n 1998, Coca-Cola also introd"ced a ,conto"r can,, similar in shape to its famo"s bottle,
on a fe# test markets, incl"ding Terre *a"te, %ndiana.
J:1K
The ne# can has never been
#idely released.
3 ne# slim and tall can began to appear in 3"stralia as of .ecember 0/, 0//6, it cost
31@1.9:. The cans have a distinct resemblance to energy drink cans. The cans #ere
commissioned by .omino-s Pi44a and are available e(cl"sively at their resta"rants.
%n 5an"ary 0//8, Coca-Cola Canada changed ,Coca-Cola Classic, labeling, removing the
,Classic, designation, leaving only ,Coca-Cola., Coca-Cola stated this is merely a name
change and the prod"ct remains the same. The cans still bear the ,Classic, logo in the
1nited 'tates.
%n 0//8, Coca-Cola introd"ced an al"min"m can designed to look like the original glass
Coca-Cola bottles.
%n 0//8, the company-s logo on cans and bottles changed. The cans and bottles retained
the red color and familiar typeface, b"t the design #as simplified, leaving only the logo
and a plain #hite s#irl the ,dynamic ribbon,!.
%n 0//8, in some parts of the #orld, the plastic bottles for all Coke varieties incl"ding
the larger 1.:- and 0-liter bottles! #as changed to incl"de a ne# plastic scre# cap and a
slightly taller conto"red bottle shape, designed to evoke the old glass bottles.
J:0K
Co#e ,ini
200 mL "stubby" bottle widely available throughout China. These are sold in small shops
for 1 yuan, and must be consumed on site in order to return the bottle.
Coke mini is a 8.: o"nce can packaging of Coca-Cola that deb"ted in .ecember 0//9.
There are plans to also sell smaller cans of 'prite, >anta 2range, Cherry Coca-Cola and
Bar+-s Eoot Beer.
Local competitors
Pepsi is "s"ally second to Coke in sales, b"t o"tsells Coca-Cola in some markets. 3ro"nd
the #orld, some local brands compete #ith Coke. %n 'o"th and Central 3merica Fola
Eeal, kno#n as Big Cola in Ae(ico, is a fast-gro#ing competitor to Coca-Cola.
J:8K
2n the
>rench island of Corsica, Corsica Cola, made by bre#ers of the local Pietra beer, is a
gro#ing competitor to Coca-Cola. %n the >rench region of Brittany, Brei4h Cola is
available. %n Per", %nca Fola o"tsells Coca-Cola, #hich led The Coca-Cola Company to
p"rchase the brand in 1999. %n '#eden, 5"lm"st o"tsells Coca-Cola d"ring the Christmas
season. %n 'cotland, the locally prod"ced %rn-Br" #as more pop"lar than Coca-Cola "ntil
0//:, #hen Coca-Cola and .iet Coke began to o"tpace its sales. %n %ndia, Coca-Cola
ranked third behind the leader, Pepsi-Cola, and local drink Th"ms 1p. The Coca-Cola
Company p"rchased Th"ms 1p in 1997. 3s of 0//;, Coca-Cola held a 6/.9M market-
share in %ndia. Tropicola, a domestic drink, is served in C"ba instead of Coca-Cola, d"e
to a 1nited 'tates embargo. >rench brand Aecca Cola and British brand Nibla Cola,
pop"lar in the Aiddle 9ast, are competitors to Coca-Cola. %n T"rkey, Cola T"rka is a
ma)or competitor to Coca-Cola. %n %ran and many co"ntries of Aiddle 9ast, Pam Pam
Cola and Parsi Cola are ma)or competitors to Coca-Cola. %n some parts of China >"t"re
cola is a competitor. %n 'lovenia, the locally prod"ced Cockta is a ma)or competitor to
Coca-Cola, as is the ine(pensive Aercator Cola, #hich is sold only in the co"ntry-s
biggest s"permarket chain, Aercator. %n %srael, EC Cola is an ine(pensive competitor.
Classiko Cola, made by Tiko =ro"p, the largest man"fact"ring company in Aadagascar,
is a serio"s competitor to Coca-Cola in many regions. <aran)ada is the top-selling soft
drink on the Port"g"ese island of Aadeira. Coca-Cola has stated that Pepsi #as not its
main rival in the 1F, b"t rather Eobinsons drinks.
Jcitation neededK
Adertising
An 1890s advertisement showing model Hilda Clark in formal 19th century attire. The ad
is titled Drink Coca-Cola 5. (US)
Coca-Cola ghost sign in Fort Dodge, Iowa. Note older Coca-Cola ghosts behind Borax
and telephone ads.
Coca-Cola signboard in Lahore, Pakistan.
Coca-Cola sales booth on the Cape Verde island of Fogo in 2004.
Coca-Cola-s advertising has significantly affected 3merican c"lt"re, and it is fre+"ently
credited #ith inventing the modern image of 'anta Cla"s as an old man in a red-and-
#hite s"it. 3ltho"gh the company did start "sing the red-and-#hite 'anta image in the
197/s, #ith its #inter advertising campaigns ill"strated by *addon '"ndblom, the motif
#as already common. Coca-Cola #as not even the first soft drink company to "se the
modern image of 'anta Cla"s in its advertising& ?hite Eock Beverages "sed 'anta in
advertisements for its ginger ale in 1907, after first "sing him to sell mineral #ater in
191:. Before 'anta Cla"s, Coca-Cola relied on images of smartly dressed yo"ng #omen
to sell its beverages. Coca-Cola-s first s"ch advertisement appeared in 189:, feat"ring the
yo"ng Bostonian actress *ilda Clark as its spokes#oman.
19;1 sa# the first "se of the nickname ,Coke, as an official trademark for the prod"ct,
#ith a series of advertisements informing cons"mers that ,Coke means Coca-Cola,.That
same year, a song from a Coca-Cola commercial called ,%-d <ike to Teach the ?orld to
'ing,, prod"ced by Billy .avis, became a hit single.
Coke-s advertising is pervasive, as one of ?oodr"ff-s stated goals #as to ens"re that
everyone on 9arth drank Coca-Cola as their preferred beverage. This is especially tr"e in
so"thern areas of the 1nited 'tates, s"ch as 3tlanta, #here Coke #as born.
'ome of the memorable Coca-Cola television commercials bet#een 196/ thro"gh 1986
#ere #ritten and prod"ced by former 3tlanta radio veteran .on $aylor ?='T 1976R
19:/, ?3=3 19:1R19:9! d"ring his career as a prod"cer for the AcCann 9rickson
advertising agency. Aany of these early television commercials for Coca-Cola feat"red
movie stars, sports heroes and pop"lar singers.
."ring the 198/s, Pepsi-Cola ran a series of television advertisements sho#ing people
participating in taste tests demonstrating that, according to the commercials, ,fifty
percent of the participants #ho said they preferred Coke actually chose the Pepsi.,
'tatisticians #ere +"ick to point o"t the problematic nat"re of a :/I:/ res"lt& most likely,
all the taste tests really sho#ed #as that in blind tests, most people simply cannot tell the
difference bet#een Pepsi and Coke. Coca-Cola ran ads to combat Pepsi-s ads in an
incident sometimes referred to as the cola "arsL one of Coke-s ads compared the so-
called Pepsi challenge to t#o chimpan4ees deciding #hich tennis ball #as f"rrier.
Thereafter, Coca-Cola regained its leadership in the market.
'elena #as a spokesperson for Coca-Cola from 1989 till the time of her death. 'he filmed
three commercials for the company. %n 199;, to commemorate her five years #ith the
company, Coca-Cola iss"ed special 'elena coke bottles.
The Coca-Cola Company p"rchased Col"mbia Pict"res in 1980, and began inserting
Coke-prod"ct images in many of its films. 3fter a fe# early s"ccesses d"ring Coca-
Cola-s o#nership, Col"mbia began to "nder-perform, and the st"dio #as sold to 'ony in
1989.
Coca-Cola has gone thro"gh a n"mber of different advertising slogans in its long history,
incl"ding ,The pa"se that refreshes,, ,%-d like to b"y the #orld a Coke,, and ,Coke is it,
see Coca-Cola slogans!.
%n 0//6, Coca-Cola introd"ced Ay Coke Ee#ards, a c"stomer loyalty campaign #here
cons"mers earn points by entering codes from specially marked packages of Coca-Cola
prod"cts into a #ebsite. These points can be redeemed for vario"s pri4es or s#eepstakes
entries.
J68K
Holi*ay campaigns
Coca-Cola Christmas truck in Dresden, Germany.
The ,*olidays are comingH, advertisement feat"res a train of red delivery tr"cks,
embla4oned #ith the Coca-Cola name and decorated #ith electric lights, driving thro"gh
a sno#y landscape and ca"sing everything that they pass to light "p and people to #atch
as they pass thro"gh.
The advertisement fell into dis"se in 0//1, as the Coca-Cola company restr"ct"red its
advertising campaigns so that advertising aro"nd the #orld #as prod"ced locally in each
co"ntry, rather than centrally in the company-s head+"arters in 3tlanta, =eorgia.
*o#ever, in 0//8, the company bro"ght back the campaign after, according to the
company, many cons"mers telephoned its information center saying that they considered
it to mark the beginning of Christmas. The advertisement #as created by 1.'. advertising
agency .oner, and has been part of the company-s global advertising campaign for many
years.
Feith <a#, a prod"cer and #riter of commercials for Belfast CityBeat, #as not
convinced by Coca-Cola-s reintrod"ction of the advertisement in 0//8, saying that ,%
don-t think there-s anything Christmassy abo"t *=Gs and the commercial is too generic.,
%n 0//1, singer Aelanie Thornton recorded the campaign-s advertising )ingle as a single,
'onderful Drea ()olidays are %oing*, #hich entered the pop-m"sic charts in
=ermany at no. 9.
J87KJ8;K
%n 0//:, Coca-Cola e(panded the advertising campaign to radio,
employing several variations of the )ingle.
Sports sponsorship
Special aluminum bottle designs, designed exclusively for the Vancouver 2010 Olympic
Winter Games Torch Relay. Available in Canada.
Coca-Cola #as the first commercial sponsor of the 2lympic games, at the 1908 games in
3msterdam, and has been an 2lympics sponsor ever since.
J86K
This corporate sponsorship
incl"ded the 1996 '"mmer 2lympics hosted in 3tlanta, #hich allo#ed Coca-Cola to
spotlight its hometo#n. Aost recently, Coca-Cola has released locali4ed commercials for
the 0/1/ 2lympics in Ganco"verL one Canadian commercial referred to Canada-s hockey
heritage and #as modified after Canada #on the gold medal game on >ebr"ary 08, 0/1/
by changing the ending line of the commercial to say ,$o# they kno# #hose game
they-re playing,.
'ince 1988, Coca-Cola has sponsored each >%>3 ?orld C"p, and other competitions
organised by >%>3. %n fact, one >%>3 to"rnament trophy, the >%>3 ?orld Co"th
Championship from T"nisia in 1988 to Aalaysia in 1998, #as called ,>%>3 Q Coca
Cola C"p,.
J88K
%n addition, Coca-Cola sponsors the ann"al Coca-Cola 6// and Coke Pero
;// for the $3'C3E 'print C"p 'eries at Charlotte Aotor 'peed#ay in Concord, $orth
Carolina and .aytona %nternational 'peed#ay in .aytona, >lorida. Coca-Cola has a long
history of sports marketing relationships, #hich over the years have incl"ded Aa)or
<eag"e Baseball, the $ational >ootball <eag"e, $ational Basketball 3ssociation and the
$ational *ockey <eag"e, as #ell as #ith many teams #ithin those leag"es. Coca-Cola is
the official soft drink of many collegiate football teams thro"gho"t the nation.
Coca-Cola #as one of the official sponsors of the 1996 Cricket ?orld C"p held on the
%ndian s"bcontinent. Coca Cola is also one of the associate sponsor of .elhi .aredevils
in %ndian Premier <eag"e.
%n 9ngland, Coca-Cola is the main sponsor of The >ootball <eag"e, a name given to the
three professional divisions belo# the Premier <eag"e in football soccer!. %t is also
responsible for the renaming of these divisions Q "ntil the advent of Coca-Cola
sponsorship, they #ere referred to as .ivisions 2ne, T#o and Three. 'ince 0//;, the
divisions have been kno#n as The Championship e+"iv. of .ivision 1!, <eag"e 2ne
e+"iv. of .iv. 0! and <eag"e 0 e+"iv. of .ivision 7!. This renaming has ca"sed "nrest
amongst some fans, #ho see it as farcical that the third tier of 9nglish >ootball is no#
called ,<eag"e 2ne., %n 0//:, Coca-Cola la"nched a competition for the 80 cl"bs of the
football leag"e Q it #as called ,?in a Player,. This allo#ed fans to place 1 vote per day
for their beloved cl"b, #ith 1 entry being chosen at random earning S0:/,/// for the
cl"bL this #as repeated in 0//6. The ,?in 3 Player, competition #as very controversial,
as at the end of the 0 competitions, <eeds 1nited 3>C had the most votes by more than
do"ble, yet they did not #in any money to spend on a ne# player for the cl"b. %n 0//8,
the competition changed to ,B"y a Player,. This competition allo#ed fans to b"y a bottle
of Coca-Cola Pero or Coca-Cola and s"bmit the code on the #rapper on the Coca-Cola
#ebsite T###.coca-colafootball.co."kU. This code co"ld then earn anything from :/p to
S1//,/// for a cl"b of their choice. This competition #as favored over the old ,?in 3
Player, competition, as it allo#ed all cl"bs to #in some money.
%ntrod"ced Aarch 1, 0/1/, in Canada, to celebrate the 0/1/ 2lympics, Coca Cola #ill
sell gold colo"red cans in packs of 10 7:: m< each, in select stores.
In mass me*ia
Coca-Cola has been prominently feat"red in co"ntless films and television programs. %t
#as a ma)or plot element in films s"ch as +ne, !"o, !hree, !he %oca&%ola -id, and !he
Gods .ust Be %ra/y. %t provides a setting for comical corporate shenanigans in the novel
Syrup by Aa(( Barry. 3nd in m"sic, in the Beatles- song, ,Come Together,, the lyrics
said, ,*e shoot Coca-Cola, he say...,.
!ealth effects
'ince st"dies indicate ,soda and s#eetened drinks are the main so"rce of calories in JtheK
3merican diet,,most n"tritionists advise that Coca-Cola and other soft drinks can be
harmf"l if cons"med e(cessively, partic"larly to yo"ng children #hose soft drink
cons"mption competes #ith, rather than complements, a balanced diet. 't"dies have
sho#n that reg"lar soft drink "sers have a lo#er intake of calci"m, magnesi"m, ascorbic
acid, riboflavin, and vitamin 3.
J81K
The drink has also aro"sed criticism for its "se of
caffeine, #hich can ca"se physical dependence.
J80K
3 link has been sho#n bet#een long-
term reg"lar cola intake and osteoporosis in older #omen b"t not men!. This #as
tho"ght to be d"e to the presence of phosphoric acid, and the risk #as fo"nd to be same
for caffeinated and noncaffeinated colas, as #ell as the same for diet and s"gared colas.
3 common criticism of Coke based on its allegedly to(ic acidity levels has been fo"nd to
be baseless by researchersL la#s"its based on these notions have been dismissed by
several 3merican co"rts for this reason. 3ltho"gh n"mero"s co"rt cases have been filed
against The Coca-Cola Company since the 190/s, alleging that the acidity of the drink is
dangero"s, no evidence corroborating this claim has been fo"nd. 1nder normal
conditions, scientific evidence indicates Coca-Cola-s acidity ca"ses no immediate harm.
'ince 198/ in the 1.'., Coke has been made #ith high-fr"ctose corn syr"p *>C'! as an
ingredient. 2riginally it #as "sed in combination #ith more e(pensive cane-s"gar, b"t by
late 198; the form"lation #as s#eetened entirely #ith *>C'. 'ome n"tritionists ca"tion
against cons"mption of *>C' beca"se it may aggravate obesity and type-0 diabetes more
than cane s"gar. 3lso, a 0//9 st"dy fo"nd that almost half of tested samples of
commercial *>C' contained merc"ry, a to(ic s"bstance.
%n %ndia, there is a ma)or controversy #hether there are pesticides and other harmf"l
chemicals in bottled prod"cts, incl"ding Coca-Cola. %n 0//7 the Centre for 'cience and
9nvironment C'9!, a non-governmental organi4ation in $e# .elhi, said aerated #aters
prod"ced by soft drinks man"fact"rers in %ndia, incl"ding m"ltinational giants PepsiCo
and Coca-Cola, contained to(ins incl"ding lindane, ..T, malathion and chlorpyrifos Q
pesticides that can contrib"te to cancer and a breakdo#n of the imm"ne system. C'9
fo"nd that the %ndian prod"ced Pepsi-s soft drink prod"cts had 76 times the level of
pesticide resid"es permitted "nder 9"ropean 1nion reg"lationsL Coca-Cola-s soft drink
#as fo"nd to have 7/ times the permitted amo"nt. C'9 said it had tested the same
prod"cts sold in the 1.'. and fo"nd no s"ch resid"es. 3fter the pesticide allegations #ere
made in 0//7, Coca-Cola sales in %ndia declined by 1: percent. %n 0//; an %ndian
parliamentary committee backed "p C'9-s findings and a government-appointed
committee #as tasked #ith developing the #orld-s first pesticide standards for soft
drinks. The Coca-Cola Company has responded that its plants filter #ater to remove
potential contaminants and that its prod"cts are tested for pesticides and m"st meet
minim"m health standards before they are distrib"ted. %n the %ndian state of Ferala sale
and prod"ction of Coca-Cola, along #ith other soft drinks, #as initially banned after the
allegations, "ntil the *igh Co"rt in Ferala overt"rned r"led that only the federal
government can ban food prod"cts. Coca-Cola has also been acc"sed of e(cessive #ater
"sage in %ndia.
The 0//8 %g $obel Pri4e a parody of the $obel Pri4es! in Chemistry #as a#arded to
'heree 1mpierre, 5oseph *ill, and .eborah 3nderson, for discovering that Coca-Cola is
an effective spermicide, and to C.C. *ong, C.C. 'hieh, P. ?", and B.$. Chiang for
proving it is not.
Criticism
Main article: Criticism of Coca-Cola
Coca-Cola has been critici4ed for alleged adverse health effects, its aggressive marketing
to children, e(ploitative labor practices, high levels of pesticides in its prod"cts, b"ilding
plants in $a4i =ermany #hich employed slave labor, environmental destr"ction,
monopolistic b"siness practices, and hiring paramilitary "nits to m"rder trade "nion
leaders. %n 2ctober 0//9, in an effort to improve their image, Coca-Cola partnered #ith
the 3merican 3cademy of >amily Physicians, providing a @://,/// grant to help
promote healthy-lifestyle ed"cationL the partnership spa#ned sharp criticism of both
Coca-Cola and the 33>P by physicians and n"tritionists.
Use as political and corporate s"m#ol
Coca-Cola advertising in the High Atlas mountains in Morocco.
Coke dispenser flown aboard the Space Shuttle in 1996. (US)
The Coca-Cola drink has a high degree of identification #ith the 1nited 'tates, being
considered by some an ,3merican Brand, or as an item representing 3merica. The
identification #ith the spread of 3merican c"lt"re has led to the p"n ,Coca-
Colani4ation,.
The drink is also often a metonym for the Coca-Cola Company.
There are some cons"mer boycotts of Coca-Cola in 3rab co"ntries d"e to Coke-s early
investment in %srael d"ring the 3rab <eag"e boycott of %srael its competitor Pepsi stayed
o"t of %srael!. Aecca Cola and Pepsi have been s"ccessf"l alternatives in the Aiddle 9ast.
3 Coca-Cola fo"ntain dispenser officially a >l"ids =eneric Bioprocessing 3pparat"s-0
or >=B3-0! #as developed for "se on the 'pace 'h"ttle as ,a test bed to determine if
carbonated beverages can be prod"ced from separately stored carbon dio(ide, #ater and
flavored syr"ps and determine if the res"lting fl"ids can be made available for
cons"mption #itho"t b"bble n"cleation and res"lting foam formation,. The "nit fle# in
1996 aboard 'T'-88 and held 1.6: liters each of Coca-Cola and .iet Coke.
Pepsi
Pepsi ads often foc"sed on celebrities, choosing Pepsi over Coke, s"pporting Pepsi-s
positioning as ,The Choice of a $e# =eneration., %n 198:, Pepsi began sho#ing people
doing blind taste tests called Pepsi Challenge in #hich they preferred one prod"ct over
the other, and then they began hiring more and more pop"lar spokespersons to promote
their prod"cts.
%n the late 199/s, Pepsi la"nched its most s"ccessf"l long-term strategy of the Cola ?ars,
Pepsi 't"ff. Cons"mers #ere invited to ,.rink Pepsi, =et 't"ff, and collect Pepsi Points
on billions of packages and c"ps. They co"ld redeem the points for free Pepsi lifestyle
merchandise. 3fter researching and testing the program for over t#o years to ens"re that
it resonated #ith cons"mers, Pepsi la"nched Pepsi 't"ff, #hich #as an instant s"ccess.
Tens of millions of cons"mers participated. Pepsi o"tperformed Coke d"ring the s"mmer
of the 3tlanta 2lympics - held in Coke-s hometo#n - #here Coke #as a lead sponsor of
the =ames. ."e to its s"ccess, the program #as e(panded to incl"de Ao"ntain .e#, and
into Pepsi-s international markets #orld#ide. The company contin"ed to r"n the program
for many years, contin"ally innovating #ith ne# feat"res each year.
J1K
The Pepsi 't"ff promotion became the s"b)ect of a la#s"it. %n one of the many
commercials, Pepsi sho#ed a yo"ng man in the cockpit of a *arrier 5"mp 5et. Belo# ran
the caption ,*arrier 5et& 8 million Pepsi Points., There #as a mechanism for b"ying
additional Pepsi Points to complete a Pepsi 't"ff order. 5ohn <eonard, of 'eattle,
?ashington, sent in a Pepsi 't"ff re+"est #ith the ma(im"m amo"nt of points and a
check for over @8//,///1' to make "p for the e(tra points he needed. Pepsi did not
accept the re+"est and <eonard filed s"it. The )"dgment #as that a reasonable person
vie#ing the commercial #o"ld reali4e that Pepsi #as not, in fact, offering a *arrier 5et.
%n response to the s"it, Pepsi added the #ords ,5"st Fidding, "nder the portion of the
commercial feat"ring the )et as #ell as changing the ,price, to 8// million Pepsi points
see <eonard v. Pepsico, %nc.!.
Coca-Cola and Pepsi engaged in a ,cyber-#ar, #ith the re-introd"ction of Pepsi 't"ff in
0//: B Coca-Cola retaliated #ith Coke Ee#ards. This cola #ar has no# concl"ded, #ith
Pepsi 't"ff ending its services and Coke Ee#ards still offering pri4es on their #ebsite.
Both #ere loyalty programs that give a#ay pri4es and prod"ct to cons"mers after
collecting bottle caps and 10 or 0; pack bo( tops, then s"bmitting codes online for a
certain n"mber of points. *o#ever, Pepsi-s online partnership #ith 3ma4on allo#ed
cons"mers to b"y vario"s prod"cts #ith their ,Pepsi Points,, s"ch as mp7 do#nloads.
Both Coca-Cola and Pepsi previo"sly had a partnership #ith the iT"nes 'tore.
In space
%n 198:, Coca-Cola and Pepsi #ere la"nched into space aboard the 'pace 'h"ttle
Challenger on 'T'-:1->. The companies had designed special cans officially the
Carbonated Beverage .ispenser 9val"ation payload or CB.9! to test packaging and
dispensing techni+"es for "se in 4ero = conditions. The e(periment #as classified a
fail"re by the sh"ttle cre#, primarily d"e to the lack of both refrigeration and gravity.
Jcitation neededK
The ,Coca-Cola 'pace .ispenser, >l"ids =eneric Bioprocessing 3pparat"s-1, or
>=B3-1! #as designed to provide astrona"ts the opport"nity to en)oy Coca-Cola and
.iet Coke in the #eightless environment of space, and to ,provide baseline data on
changes in astrona"ts- taste perception of beverages cons"med in microgravity.,
J7K
%t held
1.6: liters each of Coca-Cola and .iet Coke. 3n astrona"t #o"ld dispense the carbonated
drink of choice into a ,>l"ids Transfer 1nit, or sealed drinking c"p thro"gh a +"ick
connect on the dispenser. To save po#er, the dispenser #o"ld chill the li+"id on demand
via cooling coils bet#een the storage container and the +"ick connect fitting. The >=B3-
1 and 18 of the ,>l"id Transfer 1nits, fle# aboard the 'pace 'h"ttle .iscovery in 199:.
'T'-67!
J;K
>"rther development led to a Coca-Cola fo"ntain dispenser >l"ids =eneric
Bioprocessing 3pparat"s-0 or >=B3-0! intended as ,a test bed to determine if
carbonated beverages can be prod"ced from separately stored carbon dio(ide, #ater and
flavored syr"ps and determine if the res"lting fl"ids can be made available for
cons"mption #itho"t b"bble n"cleation and res"lting foam formation,.
J:K
This "nit
dispensed Po#erade sports drink in addition to Coca-Cola and .iet Coke. This "nit fle#
on 'T'-88 aboard 'pace 'h"ttle 9ndeavo"r in 1996. 1nfort"nately, the >=B3-0 did not
#ork as e(pected.
$econd Cola %ar
."ring the 199/s, a ,second cola #ar, #as reported in the 1nited Fingdom. This time it
#as d"e to the la"nch of Girgin Cola, as #ell as 'ainsb"ry-s store brand Classic Cola,
#hich, "nlike most store brand colas, #as designed to look like a top prod"ct #orthy of
competition. >or a fe# years both colas #ere competitive #ith Coca-Cola and PepsiL at
one point Coca-Cola even s"ed 'ainsb"ry-s claiming the design of the Classic Cola can
#as too similar to Coke-s. *o#ever, today, both Girgin and Classic Cola are far behind
the t#o ma)or brands.
The high-p"blicity marketing also contin"ed into the 199/s. %n 1998, the 'pice =irls
then at their peak! signed a m"lti-million po"nd sponsorship deal #ith Pepsi. They
starred in three Pepsi commercialsL released t#o limited edition singles #ith Pepsi,
,Aove 2ver, and ,'tep To Ae,L feat"red on Pepsi packagingL and performed t#o live
concerts in %stanb"l organised and sponsored by the company.
&Cola %ars& in popular culture
3 satirical look at the cola #ar can be fo"nd in the 198: film !he %oca&%ola -id,
starring 9ric Eoberts.
Eock m"sician $eil Co"ng-s song This $ote-s for Co" off of his 1988 alb"m This
$ote-s for Co" contains the lyricsL ,3in-t singin- for Pepsi 3in-t singin- for Coke,
Eock m"sician Billy 5oel mentions the ,Cola ?ars, in his n"mber-one hit ,?e
.idn-t 'tart the >ire.,
3"dio collage gro"p $egativland "tili4e advertising and media reporting of the
,Cola ?ars, in their alb"m .ispepsi.
South Par0 referenced the Cola ?ars in the 0//7 episode ,%t-s Christmas in
Canada,, #hen one character stated that Canada #as ,devastated by the Cola
?ars.,
J6K
The online game Fingdom of <oathing feat"res a literal Cola ?ar bet#een the
.yspepsi-Cola and Cloaca-Cola armies.
%n the Eed .#arf novel 1nfinity 'elcoes %areful Drivers, the origins of Fryten-s
original ship, the $ova :, are given as the ship being involved in an advertising
campaign for Coke.
P"nk Cabaret band The .resden .olls makes mention of the Cola ?ars in the
song ,Aodern Aoonlight,, on their alb"m Ces, Girginia...& ,Coke and Pepsi
finally fo"nd a compromise....,
%n 1998, the satirical ne#spaper !he +nion #rote of a ,memorial, for the )obs lost
to the Cola ?ars.
J8K
The episode ,>ry and the 'l"rm >actory, from the comedy series >"t"rama
references the Cola ?ars by stating they #ill market -$e# 'l"rm-, ,then, #hen
everyone hates it, #e-ll bring back 'l"rm Classic, and make billionsH,
%n Fallout2 3e" Vegas a mascot called ,>est"s, for the drink '"nset 'arsparilla
#ill make mention of $"ka-Cola, the rival soft drink of '"nset 'arsaparilla. 3fter
this, he-ll mention that to avoid legal action from $"ka-Cola, he m"st inform yo"
that $"ka-cola is a ,'#ell, drink, b"t sometimes people )"st #ant something
different. This is probably reference to the Cola ?ars.
The Soft Drink industry has been assigned as the vehicle for tackling the topic of industry
analysis and competitive dynamics. The case covers developments in the soft drink
industry through 1993. It describes how the industry evolved into its current structure
largely following Coca-Colas leadership. What is particularly interesting is determining
why the major competitors in the industry have been able to earn above normal returns
for close to 100 years, and why the industry is organized the way it is. The case allows us
to analyze how the actions and reactions of competitors over time work to create their
own industry structure. The case also allows us to examine how prior strategic
commitments to particular strategies create competitive positions, which in turn constrain
the future competitive moves of firms. Since competitive positioning determines a firms
long-run performance, we need to thoroughly grasp the essentials of what makes some
competitive positions and competitive strategies more viable, and others not, and why.
&- .hy has the soft *rin# in*'stry +een so profita+le/
a. 'ince 198/ cons"mption gre# by an average of 7M
b. >rom 198: to 199: both Coke and Pepsi achieve average ann"al gro#th of
aro"nd 1/M
c. 3mericanVs drank more soda than any other beverage
d. *ead-to-*ead Competition bet#een both Coke and Pepsi reinforced brand
recognition of each other. This ass"mes that marketing added to profits
rather than eating them "p.
e. Gery large market share. :7M in year 0///.
f. 3verage 1/.6:M net profit in sales for both Pepsi and Coke.
%- .hy has Co#e +een so s'ccessf'l/ .hy was Co#e so e0traor*inarily profita+le/
a. Gery *igh Aarket 'hare. 'trong marketing campaign. 3 "ni+"e and
globally appreciated prod"ct. 3part from Pepsi, no strong competition.
b. Coke had high profit margins by shifting some cost to bottlers. =lobally recogni4ed
prod"ct that co"ld be sold for a premi"m. 9(panded man"fact"ring and distrib"tion
system that kept prices lo#.
1- Prepare two five forces mo*els of the Soft 2rin# In*'stry3 one for the late
&4567s8early &496s an* one for the mi* &466s- :Be s're to show at least the
concentrate an* +ottlers segments of the in*'stry in yo'r *iagrams- $ote that the
+ottlers are ;+'yers< from the concentrate perspective= an* the concentrate
man'fact'res are ;s'ppliers< from the +ottlers7 perspective-> How have the
in*'stry7s competitive forces change* over time/
a. In the very early years there was plenty of competition between small cola companies.
Coke emerged as the strong leader and Pepsi soon followed. Up until recent there was
minimal competition
4. Compare the economics of the concentrate business to the bottling business: why
is the profitability so different? Why do concentrate producers want to integrate
into bottling?
a. Concentrate business: Concentrate producers were dependent on the Pepsi and Coke
bottling network to distribute their products. Starting and maintaining a concentrate
manufacturing plant involved little capital investment in machinery, overhead, and labor.
Significant costs were for advertising, promotion, market research, and bottler relations.
Producers negotiated with bottlers major suppliers. One factory could server the entire
united states.
b. Bottlers: Purchased concentrate, added carbonated water, added corn syrup, bottled it,
and delivered it to customer accounts. Gross Profits were high but operating margins
were razor thing. Bottlers handled merchandising. Bottlers could also work with other
non-cola brands.
?- .hat is happening in the soft *rin# in*'stry/ How *o the ma@or *evelopments
affect smaller competitorsD
a. 3 rise of non-cola beverages.
b. Bottled #ater.
c. 'ports drinks.
d. Tea based drinks.
e. 5"ice based drinks.
f. .airy based drinks.
g. $on-carb based drinks.
h. 'ome smaller competitors have been p"rchase 'oBe by Pepsi! #hile others no# have
to face stiff competition from Pepsi and Code.
6. How was Pepsi able to gain share in 1950s? In the 1960s and early 1970s? After
the Pepsi Challenge? Consider each period separately, and be specific. Why didnt
Coke respond? What provoked the eventual response by Coke beginning in the
1980s?
a. 1950s: Alfred Steele, a former Coca-Cola marketing executive, became Pepsis CEO.
Pepsi introduced Beat Coke theme Pepsi introduced 26-ounce bottle, targeting family
consumption. Coke stayed with its 6.5-ounce bottle. For reference McDonalds Supersize
Coke was 42 ounces.
b. 1960s: New CEO, new slogan, Pepsi Generation. By focusing on the younger
population Pepsi narrowed Cokes lead to a 2-to-1 margin. Pepsi had larger and more
modern bottling facilities. Both groups starting adding new soft drink brands. Pepsi
merged with Frito-lay to become PepsiCo. Coke wouldnt even mention Pepsis name
during meetings.
c. Pepsi Challenge: Starting in Texas, Pepsis bottlers had public blind taste tests to prove
that Pepsi tasted better. This marking stunt increased sales significantly. Pepsi gained a
1.4 point lead in food store leads. Coke countered with rebates and renegotiations with
franchise bottlers.
d. Cokes response: Coke got a new CEO, Roberto Goizueta. Coke cut costs (used corn
syrup instead of sugar), doubled advertising spending, and sold off most non-CSD
business. Diet Coke was introduced to become a phenomenal success. Coke tried to be
innovative by changing its formula, but that failed miserably. Coke introduced 11 new
products. Pepsi emulated most of Cokes strategic moves.
7. Will Coke and Pepsi sustain their profits through the next decade? What would
you recommend to Coke to ensure its success? To Pepsi?
a. It should not be a problem to sustain their profits through the next decade. The more
important question is whether they can sustain their historical rate of growth. To do so
they need to seek out new markets and increase consumption in currently developing
markets such as China and India
b. I would recommend Coke to focus on its emerging international market. I would also
encourage Coke to expand their offerings. I think Coke made a serious mistake when
they failed to purchase Quaker Oats and with it the Gatorade Sports Drink line. If Coke
focuses on several beverage offerings they can leverage their internal bottling and
distribution infrastructure. Different types of beverages can keep Cokes overall profit
intact when there is a shift in consumer preference, such as a shift from soft drinks to
healthier alternatives (Think of the effect Atkins had on the food industry)
c. For Pepsi I would basically recommend the same thing as Coke. I would encourage
Pepsi to focus on its line of soft drink alternatives, which seem to have a much stronger
market share than Cokes line. I would encourage Pepsi to only compete with Coke when
it is profitable to do so.
1. SWOT ANALYSIS: Strengths Coca-Cola has been an intricate part of American
culture for over a century. The products image is laden with sentimentality, and
this is an image many people have taken deeply to heart. The Coca-Cola image is
displayed on T-shirts, hats, and collectible memorabilia. This extremely
recognizable branding is one of Coca-Colas greatest strengths. Enjoyed more
than 685 million times a day around the world Coca-Cola stands as a simple, yet
powerful symbol of quality and enjoyment (Allen, 1995).
Additionally, according to Bettman, et. al, (1998) Coca-Colas bottling system is
one of their greatest strengths. It allows them to conduct business on a global
scale while at the same time maintain a local approach. The bottling companies
are locally owned and operated by independent business people who are
authorized to sell products of the Coca-Cola Company. Because Coke does not
have outright ownership of its bottling network, its main source of revenue is the
sale of concentrate to its bottlers (Bettman, et. al, 1998).
Weaknesses: Although domestic business as well as many international markets
are thriving (volumes in Latin America were up 12%), Coca-Cola has recently
reported some "declines in unit case volumes in Indonesia and Thailand due to
reduced consumer purchasing power." According to an article in Fortune
magazine, "In Japan, unit case sales fell 3% in the second quarter [of 1998]...scary
because while Japan generates around 5% of worldwide volume, it contributes
three times as much to profits. Latin America, Southeast Asia, and Japan account
for about 35% of Coke's volume and none of these markets are performing to
expectation (Mclean, 1998).
Opportunities: Brand recognition is the significant factor affecting Cokes
competitive position. Coca-Colas brand name is known well throughout 90% of
the world today. The primary concern over the past few years has been to get this
name brand to be even better known. Packaging changes have also affected sales
and industry positioning, but in general, the public has tended not to be affected
by new products (Allen, 1995).
Coca-Colas bottling system also allows the company to take advantage of infinite
growth opportunities around the world. This strategy gives Coke the opportunity
to service a large geographic, diverse, area (Bettman, et. al, 1998).
Threats: Currently, the threat of new viable competitors in the carbonated soft
drink industry is not very substantial. The threat of substitutes, however, is a very
real threat. The soft drink industry is very strong, but consumers are not
necessarily married to it. Possible substitutes that continuously put pressure on
both Pepsi and Coke include tea, coffee, juices, milk, and hot chocolate (Cola
Wars, 1991).
Even though Coca-Cola and Pepsi control nearly 40% of the entire beverage
market, the changing health-consciousness of the market could have a serious
affect. Of course, both Coke and Pepsi have already diversified into these
markets, allowing them to have further significant market shares and offset any
losses incurred due to fluctuations in the market (Cola Wars, 1991).
Consumer buying power also represents a key threat in the industry. The rivalry
between Pepsi and Coke has produce a very slow moving industry in which
management must continuously respond to the changing attitudes and demands of
their consumers or face losing market share to the competition. Furthermore,
consumers can easily switch to other beverages with little cost or consequence
(Cola Wars, 1991).
2. BOSTON CCONSULTING GROUP MATRIX
In accordance with the BCG matrix, I would recommend the following strategies
for Coca-cola products in each category:
Dog Strategy: Either invest to earn market share or consider disinvesting.
Star Strategy: Invest profits for future growth. Question Mark Strategy: Either
invest heavily in order to push the products to star status, or divest in order to
avoid it becoming a Dog.
Cash Cow Strategy: Use profits to finance new products and growth elsewhere.
3.LIFE CYCLE:
To be able to market its product properly, a firm must be aware of the product life
cycle of its product. The standard product life cycle tends to have five phases:
Development, Introduction, Growth, Maturity and Decline. Coca-Cola is currently
in the maturity stage, which is evidenced primarily by the fact that they have a
large, loyal group of stable customers.
Furthermore, cost management, product differentiation and marketing have
become more important as growth slows and market share becomes the key
determinant of profitability. In foreign markets the product life cycle is in more of
a growth trend Coke's advantage in this area is mainly due to its establishment
strong branding and it is now able to use this area of stable profitability to
subsidize the domestic "Cola Wars".
Cola %ars ' (ie (orces Anal"sis
&- Soft 2rin# In*'stry Five Forces Analysis3
'oft drink ind"stry is very profitable, more so for the concentrate prod"cers than the
bottlerVs. This is s"rprising considering the fact that prod"ct sold is a commodity #hich
can even be prod"ced easily. There are several reasons for this, "sing the five forces
analysis #e can clearly demonstrate ho# each force contrib"tes the profitability of the
ind"stry.
Barriers to Entry3
The several factors that make it very diffic"lt for the competition to enter the soft drink
market incl"de&
Bottling $etwor#3 Both Coke and PepsiCo have franchisee agreements #ith their
e(isting bottlerVs #ho have rights in a certain geographic area in perpet"ity. These
agreements prohibit bottlerVs from taking on ne# competing brands for similar
prod"cts. 3lso #ith the recent consolidation among the bottlerVs and the back#ard
integration #ith both Coke and Pepsi b"ying significant percent of bottling
companies, it is very diffic"lt for a firm entering to find bottlerVs #illing to
distrib"te their prod"ct.
The other approach to try and b"ild their bottling plants #o"ld be very capital-intensive
effort #ith ne# efficient plant capital re+"irements in 1998 being @8: million.
A*vertising Spen*3 The advertising and marketing spend Case 9(hibit : B 6! in
the ind"stry is in 0/// #as aro"nd @ 0.6 billion /.;/ per case W 6.6 billion cases!
mainly by Coke, Pepsi and their bottlerVs. The average advertisement spending
per point of market share in 0/// #as 8.7 million 9(hibit 0!. This makes it
e(tremely diffic"lt for an entrant to compete #ith the inc"mbents and gain any
visibility.
Bran* Image 8 oyalty3 Coke and Pepsi have a long history of heavy advertising
and this has earned them h"ge amo"nt of brand e+"ity and loyal c"stomerVs all
over the #orld. This makes it virt"ally impossible for a ne# entrant to match this
scale in this market place.
Retailer Shelf Space ARetail 2istri+'tionB3 Eetailers en)oy significant margins
of 1:-0/M on these soft drinks for the shelf space they offer. These margins are
+"ite significant for their bottom-line. This makes it to"gh for the ne# entrants
to convince retailers to carryIs"bstit"te their ne# prod"cts for Coke and Pepsi.
Fear of Retaliation3 To enter into a market #ith entrenched rival behemoths like
Pepsi and Coke is not easy as it co"ld lead to price #ars #hich affect the ne#
comer.
S'ppliers3
Commo*ity Ingre*ients3 Aost of the ra# materials needed to prod"ce
concentrate are basic commodities like Color, flavor, caffeine or additives, s"gar,
packaging. 9ssentially these are basic commodities. The prod"cers of these
prod"cts have no po#er over the pricing hence the s"ppliers in this ind"stry are
#eak.
B'yers3
The ma)or channels for the 'oft .rink ind"stry 9(hibit 6! are food stores, >ast food
fo"ntain, vending, convenience stores and others in the order of market share. The
profitability in each of these segments clearly ill"strate the b"yer po#er and ho#
different b"yers pay different prices based on their po#er to negotiate.
Foo* Stores& These b"yers in this segment are some #hat consolidated #ith
several chain stores and fe# local s"permarkets, since they offer premi"m shelf
space they command lo#er prices, the net operating profit before ta( $2PBT!
for concentrate prod"cerVs in this segment is @/.07Icase
Convenience Stores3 This segment of b"yerVs is e(tremely fragmented and hence
have to pay higher prices, $2PBT here is @/.69 Icase.
Fo'ntain3 This segment of b"yerVs are the least profitable beca"se of their large
amo"nt of p"rchases hey make, %t allo#s them to have freedom to negotiate. Coke
and Pepsi primarily consider this segment XPaid 'amplingY #ith lo# margins.
$2PBT in this segment is @/./9 Icase.
Cen*ing3 This channel serves the c"stomerVs directly #ith absol"tely no po#er
#ith the b"yer, hence $2PBT of @/.98Icase.
S'+stit'tes3 <arge n"mbers of s"bstit"tes like #ater, beer, coffee, )"ices etc are
available to the end cons"mers b"t this co"ntered by concentrate providers by h"ge
advertising, brand e+"ity, and making their prod"ct easily available for cons"mers, #hich
most s"bstit"tes cannot match. 3lso soft drink companies diversify b"siness by offering
s"bstit"tes themselves to shield themselves from competition. Rivalry3
The Concentrate Prod"cer ind"stry can be classified as a ."opoly #ith Pepsi and Coke as
the firms competing. The market share of the rest of the competition is too small to ca"se
any "pheaval of pricing or ind"stry str"ct"re. Pepsi and Coke mainly over the years
competed on differentiation and advertising rather than on pricing e(cept for a period in
the 199/Vs. This prevented a h"ge dent in profits. Pricing #ars are ho#ever a feat"re in
their international e(pansion strategies.
%- Economics of Bottling vs Concentrate B'siness
Higher number of bottlers when compared to the concentrate producers which
fosters competition and reduces margins in the bottling business
Huge capital costs to set up an efficient plant for the bottlers while the capital
costs in concentrate business are minimal
Costs for distribution and production account for around 65% of sales for bottlers
while in the concentrate business its around 17%
Most of the brand equity created in the business remains with concentrate
producers
Possible Reasons for Vertical Integration:

With the decrease in the number of bottlers from 2000 in 1970 to less than 300 in
2000, the concentrate producers were concerned about the bottlers clout and
started acquiring stakes in the bottling business.
They could offer attractive packaging to the end consumer.
To preempt new competition from entering business if they control the bottling.
3. Effect of competition between Coke and Pepsi on industry profits:
During the 1960s and 70s Coke and Pepsi concentrated on a differentiation and
advertising strategy. The Pepsi Challenge in 1974 was a prime example of this strategy
where blind taste tests were hosted by Pepsi in order to differentiate itself as a better
tasting product from Coke.
However during the early 1990s bottlers of Coke and Pepsi employed low priced
strategies in the supermarket channel in order to compete with store brands, This had a
negative effect on the profitability of the bottlers. Net profit as a percentage of sales for
bottlers during this period was in the low single digits (-2.1-2.9% Exhibit 4) Pepsi and
Coke were however able to maintain the profitability through sustained growth in Frito
Lay and International sales respectively. The bottling companies however in the late 90s
decided to abandon the price war, which was not doing industry any good by raising the
prices.
Coke was more successful internationally compared to Pepsi due to its early lead as Pepsi
had failed to concentrate on its international business after the world war and prior to the
70s. Pepsi however sought to correct this mistake by entering emerging markets where it
was not at a competitive disadvantage with respect to Coke as it failed to make any heady
way in the European market.

4. Can Coke and Pepsi sustain their profits in the wake of flattening demand and
growing popularity of non-carbonated drinks?
Yes Coke can Pepsi can sustain their profits in the industry because of the following
reasons:
The industry structure for several decades has been kept intact with no new
threats from new competition and no major changes appear on the radar line
This industry does not have a great deal of threat from disruptive forces in
technology.
Coke and Pepsi have been in the business long enough to accumulate great
amount of brand equity which can sustain them for a long time and allow them to
use the brand equity when they diversify their business more easily by leveraging
the brand.
Globalization has provided a boost to the people from the emerging economies to
move up the economic ladder. This opens up huge opportunity for these firms
Per capita consumption in the emerging economies is very small compared to the
US market so there is huge potential for growth.
Coke and Pepsi can diversify into noncarbonated drinks to counter the flattening
demand in the carbonated drinks. This will provide diversification options and
provide an opportunity to grow.
?-Impact of glo+aliDation on In*'stry str'ct're3
Globalization provides Coke and Pepsi with both unique challenges as well as
opportunities at the same time. To certain extent globalization has changed the industry
structure because of the following factors.
Rivalry Intensity: Coke has been more dominant (53% of market share in 1999).
in the international market compared to Pepsi (21% of market share in 1999) This
can be attributed to the fact that it took advantage of Pepsi entering the markets
late and has set up its bottlers and distribution networks especially in developed
markets. This has put Pepsi at a significant disadvantage compared to the US
Market.
Pepsi is however trying to counter this by competing more aggressively in the
emerging economies where the dominance of Coke is not as pronounced, With
the growth in emerging markets significantly expected to exceed the developed
markets the rivalry internationally is going to be more pronounced.
Barriers to Entry: Barriers to entry are not as strong in emerging markets and it
will be more challenging to Coke and Pepsi, where they would have to deal with
regulatory challenges, cultural and any existing competition who have their
distribution networks already setup. The will lack the clout that have with the
bottlers in the US.
Suppliers: Since the raw materials are commodities there should be no problems
on this front this is not any different

Customers: Internationally retailers and fountain sales are going to be weaker as
they are not consolidated, like in the US Market. This will provide Coke and
Pepsi more clout and pricing power with the buyers
Substitutes: Since many of the markets are culturally very different and vast
numbers of substitutes are available, added to the fact that carbonated products
are not the first choices to quench thirst in these cultures present additional
significant challenges. The consumption is very low in the emerging markets is
miniscule compared to the US market. A lot more money would have to be spent
on advertising to get people used the carbonated drinks.
COA .AR CO$!I$EES 3 CO)E A$2 PEPSI I$ !HE !.E$!"
FIRS! CE$!ER"
&- .hy is the soft *rin# in*'stry so profita+le/
3n ind"stry analysis thro"gh PorterVs >ive >orces reveals that market forces are favorable
for profitability.
.efining the ind"stry& Both concentrate prod"cers CP! and bottlers are profitable. These
t#o parts of the ind"stry are e(tremely interdependent, sharing costs in proc"rement,
prod"ction, marketing and distrib"tion.Aany of their f"nctions overlapL for instance, CPs
do some bottling, and bottlers cond"ct many promotional activities. The ind"stry is
already vertically integrated to some e(tent. They also deal #ith similar s"ppliers and
b"yers. 9ntry into the ind"stry #o"ld involve developing operations in either or both
disciplines. Beverage s"bstit"tes #o"ld threaten both CPs and their associated bottlers.
Beca"se of operational overlap and similarities in their market environment, #e can
incl"de both CPs and bottlers in o"r definition of the soft drink ind"stry. %n 1997, CPs
earned 09M preta( profits on their sales, #hile bottlers earned 9M profits on their sales,
for a total ind"stry profitability of 1;M 9(hibit 1!. This ind"stry as a #hole generates
positive economic profits.
Eivalry& Eeven"es aree(tremely concentrated in this ind"stry, #ith Coke and Pepsi,
together #ith their associated bottlers, commanding 87M of the case market in 199;.
3dding in the ne(t tier of soft drink companies, the top si( controlled 89M of the market.
%n fact, one co"ld characteri4e the soft drink market as an oligopoly, or even a d"opoly
bet#een Coke and Pepsi, res"lting in positive economic profits. To be s"re, there #as
to"gh competition bet#een Coke and Pepsi for market share, and this occasionally
hampered profitability.>or e(ample, price #ars res"lted in #eak brand loyalty and eroded
margins for both companies in the 198/s. The Pepsi Challenge, mean#hile, affected
market share #itho"t hampering per case profitability, as Pepsi #as able to compete on
attrib"tes other than price.
'"bstit"tes& Thro"gh the early 196/s, soft drinks #ere synonymo"s #ith XcolasY in the
mind of cons"mers. 2ver time, ho#ever, other beverages, from bottled #ater to teas,
became more pop"lar, especially in the 198/s and 199/s. Coke and Pepsi responded by
e(panding their offerings, thro"gh alliances e.g. Coke and $estea!,ac+"isitions e.g.
Coke and Ain"te Aaid!, and internal prod"ct innovation e.g. Pepsi creating 2range
'lice!,capt"ring the val"e of increasingly pop"lar s"bstit"tes internally. Proliferation in
the n"mber of brands did threaten the profitability of bottlers thro"gh 1986, as they more
fre+"ent line set-"ps, increased capital investment, and development of special
management skills for more comple( man"fact"ring operations and distrib"tion. Bottlers
#ere able to overcome these operational challenges thro"gh consolidation to achieve
economies of scale. 2verall, beca"se of the CPs efforts in diversification, ho#ever,
s"bstit"tes became less of a threat.
Po#er of '"ppliers& The inp"ts for Coke and PepsiVs prod"cts #ere primarily s"gar and
packaging. '"gar co"ld be p"rchased from many so"rces on the open market, and if s"gar
became too e(pensive, the firms co"ld easily s#itch to corn syr"p, as they did in the early
198/s. 'o s"ppliers of n"tritive s#eeteners did not have m"ch bargaining po#er against
Coke, Pepsi, or their bottlers. $"tra'#eet, mean#hile, had recently come off patent in
1990, and the soft drink ind"stry gained another s"pplier, *olland '#eetener, #hich
red"ced 'earleVs bargaining po#er and lo#ering the price of aspartame.
?ith an ab"ndant s"pply of ine(pensive al"min"m in the early 199/s and several can
companies competing for contracts #ith bottlers, can s"ppliers had very little s"pplier
po#er. >"rthermore, Coke and Pepsi effectively f"rther red"ced the s"pplier of can
makers by negotiating on behalf of their bottlers, thereby red"cing the n"mber of ma)or
contracts available to t#o. ?ith more than t#o companies vying for these contracts,
Coke and Pepsi #ere able to negotiate e(tremely favorable agreements. %n the plastic
bottle b"siness, again there #ere more s"ppliers than ma)or contracts, so direct
negotiation by the CPs #as again effective at red"cing s"pplier po#er.
Po#er of b"yers& The soft drink ind"stry sold to cons"mers thro"gh five principal
channels& food stores, convenience and gas, fo"ntain, vending, and mass merchandisers
primary part of X2therY in XCola ?arsZY case!.'"permarkets, the principal c"stomer
for soft drink makers, #ere a highly fragmented ind"stry. The stores co"nted on soft
drinks to generate cons"mer traffic, so they needed Coke and Pepsi prod"cts. B"t d"e to
their tremendo"s degree of fragmentation the biggest chain made "p 6M of food retail
sales, and the largest chains controlled "p to 0:M of a region!, these stores did not have
m"ch bargaining po#er. Their only po#er #as control over premi"m shelf space, #hich
co"ld be allocated to Coke or Pepsi prod"cts. This po#er did give them some control
over soft drink profitability. >"rthermore, cons"mers e(pected to pay less thro"gh this
channel, so prices #ere lo#er, res"lting in some#hat lo#er profitability. $ational mass
merchandising chains s"ch as ?al-Aart, on the other hand, had m"ch more bargaining
po#er. ?hile these stores did carry both Coke and Pepsi prod"cts, they co"ld negotiate
more effectively d"e to their scale and the magnit"de of their contracts. >or this reason,
the mass merchandiser channel #as relatively less profitable for soft drink makers. The
least profitable channel for soft drinks, ho#ever, #as fo"ntain sales. Profitability at these
locations #as so abysmal for Coke and Pepsi that they considered this channel Xpaid
sampling.Y This #as beca"se b"yers at ma)or fast food chains only needed to stock the
prod"cts of one man"fact"rer, so they co"ld negotiate for optimal pricing. Coke and
Pepsi fo"nd these channels important, ho#ever, as an aven"e to b"ild brand recognition
and loyalty, so they invested in the fo"ntain e+"ipment and c"ps that #ere "sed to serve
their
prod"cts at these o"tlets. 3s a res"lt, #hile Coke and Pepsi gained only :M margins, fast
food chains made 8:M gross margin on fo"ntain drinks.
Gending, mean#hile, #as the most profitable channel for the soft drink ind"stry.
9ssentially there #ere no b"yers to bargain #ith at these locations, #here Coke and Pepsi
bottlers co"ld sell directly to cons"mers thro"gh machines o#ned by bottlers. Property
o#ners #ere paid a sales commission on Coke and Pepsi prod"cts sold thro"gh machines
on their property, so their incentives #ere properly aligned #ith those of the soft drink
makers, and prices remained high. The c"stomer in this case #as the cons"mer, #ho #as
generally limited on thirst +"enching alternatives.
The final channel to consider is convenience stores and gas stations. %f Aobil or 'even-
9leven #ere to negotiate on behalf of its stations, it #o"ld be able to e(ert significant
b"yer po#er in transactions #ith Coke and Pepsi. 3pparently, tho"gh, this #as not the
nat"re of the relationship bet#een soft drink prod"cers and this channel, #here bottlersV
profits #ere relatively high, at @/.;/ per case, in 1997. ?ith this high profitability, it
seems likely that Coke and Pepsi bottlers negotiated directly #ith convenience store and
gas station o#ners.
'o the only b"yers #ith dominant po#er #ere fast food o"tlets. 3ltho"gh these o"tlets
capt"red most of the soft drink profitability in their channel, they acco"nted for less than
0/M of total soft drink sales. Thro"gh other markets, ho#ever, the ind"stry en)oyed
s"bstantial profitability beca"se of limited b"yer po#er.
Barriers to 9ntry& %t #o"ld be nearly impossible for either a ne# CP or a ne# bottler to
enter the ind"stry. $e# CPs #o"ld need to overcome the tremendo"s marketing m"scle
and market presence of Coke, Pepsi, and a fe# others, #ho had established brand names
that #ere as m"ch as a cent"ry old. Thro"gh their .'. practices, these companies had
intimate relationships #ith their retail channels and #o"ld be able to defend their
positions effectively thro"gh disco"nting or other tactics. 'o, altho"gh the CP ind"stry is
not very capital
intensive, other barriers #o"ld prevent entry. 9ntering bottling, mean#hile, #o"ld
re+"ire s"bstantial capital investment, #hich #o"ld deter entry. >"rther complicating
entry into this market, e(isting bottlers had e(cl"sive territories in #hich to distrib"te
their prod"cts. Eeg"latory approval of intrabrand e(cl"sive territories, via the 'oft .rink
%nterbrand Competition 3ct of 198/, ratified this strategy, making it impossible for ne#
bottlers to get started in any region #here an e(isting bottler operated, #hich incl"ded
every significant market in the 1'.
%n concl"sion, an ind"stry analysis by PorterVs >ive >orces reveals that the soft drink
ind"stry in 199; #as favorable for positive economic profitability, as evidenced in
companiesV financial o"tcomes.
%- Compare the economics of the concentrate +'siness to the +ottling +'siness- .hy
is the profita+ility so *ifferent/
%n some #ays, the economics of the concentrate b"siness and the bottling b"siness sho"ld
be
ine(tricably linked. The CPs negotiate on behalf of their s"ppliers, and they are
"ltimately dependent on the same c"stomers. 9ven in the case of materials, s"ch as
aspartame, that are incorporated directly into concentrates, CPs pass along any negotiated
savings directly to their bottlers. Cet the ind"stries are +"ite different in terms of
profitability. %n some #ays, the economics of the concentrate b"siness and the bottling
b"siness sho"ld be ine(tricably linked. The CPs negotiate on behalf of their s"ppliers,
and they are "ltimately dependent on the same c"stomers. 9ven in the case of materials,
s"ch as aspartame, that are incorporated directly into concentrates, CPs pass along any
negotiated savings directly to their bottlers. Cet the ind"stries are +"ite different in terms
of profitability.
The f"ndamental difference bet#een CPs and bottlers is added val"e. The biggest so"rce
of added val"e for CPs is their proprietary, branded prod"cts. Coke has protected its
recipe for over a h"ndred years as a trade secret, and has gone to great lengths to prevent
others from learning its cola form"la. The company even left a billion-person market
%ndia! to avoid revealing this information. 3s a res"lt of e(tended histories and
s"ccessf"l advertising efforts, Coke and Pepsi are respected ho"sehold names, giving
their prod"cts an a"ra of val"e that cannot be easily replicated. 3lso hard to replicate are
Coke and PepsiVs sophisticated strategic and operational management practices, another
so"rce of added val"e.
Bottlers have significantly less added val"e. 1nlike their CP co"nterparts, they do not
have branded prod"cts or "ni+"e form"las. Their added val"e stems from their
relationships #ith CPs and #ith their
c"stomers. They have repeatedly negotiated contracts #ith their c"stomers, #ith #hom
they #ork on an ongoing basis, and #hose idiosyncratic needs are familiar to them.
Thro"gh long-term, in depth relationships #ith their c"stomers, they are able to serve
c"stomers effectively. Thro"gh .'. programs, they lo#er their c"stomersV costs,
making it possible for their c"stomers to p"rchase and sell more prod"ct. %n this
#ay, bottlers are able to gro# the pie of the soft drink market. Their other so"rce of
profitability is their contract relationships #ith CPs, #hich grant them e(cl"sive
territories and share some cost savings. 9(cl"sive territories prevent intrabrand
competition, creating oligopolies at the bottler level, #hich red"ce rivalry and allo#
profits. To f"rther b"ild Xglass ho"ses,Y as described by $aleb"ff and Brandenberger
Co-opetition, p. 88!, for their bottlers, CPs pass along some of their negotiated s"pply
savings to their bottlers. Coke gives 0I7 of negotiated aspartame savings to its bottlers by
contract, and Pepsi does this in practice. This practice keeps bottlers comfortable eno"gh,
so that they are "nlikely to challenge their contracts. BottlersV principal ability is to "se
their capital reso"rces effectively. '"ch operational effectiveness is not a driver of added
val"e, ho#ever, as operational effectiveness is easily replicated.
Bet#een 1986 and 1997, the differences in added val"e bet#een CPs and bottlers res"lted
in a ma)or shift in profitability #ithin the ind"stry. 9(hibit 1 demonstrates these dramatic
changes. ?hile ind"stry profitability increased by 11M, CP profits rose by 17/M on a per
case basis, from @/.1/ to @/.07. ."ring this period, bottler profits act"ally dropped on a
per case basis by 07M, from @/.7: to /.08.
2ne possibility is that prod"ct line e(pansion in defense against ne# age beverages
helped CPs b"t h"rt bottlers. This #o"ld be e(pected if bottlerVs per case costs increased
d"e to the operational challenges and capital costs of prod"cing and distrib"ting broader
prod"ct lines. This, ho#ever, #as not the caseL cost of sales per case decreased for both
CPs and bottlers by 08M d"ring this period, mostly d"e to economies of scale developed
thro"gh consolidation. The real difference bet#een the fort"nes of CPs and bottlers
thro"gh this period, then, is in top line reven"es. ?hile CPs #ere able to charge more for
their prod"cts, bottlers faced price press"re, res"lting in lo#er reven"es per case.
These per case reven"e changes occ"rred d"ring a period of slo#ing gro#th in the
ind"stry, as sho#n in 9(hibit 0. =ro#th in per capita cons"mption of soft drinks slo#ed
to a 1.0M C3=E in the period 1989 to 1997, #hile case vol"me gro#th tapered to 0.7M.
%n an str"ggle to sec"re limited shelf space #ith more prod"cts and slo#er overall
gro#th, bottlers #ere probably forced to give "p more margin on their prod"cts. CPs,
mean#hile, co"ld contin"e increasing the prices for their concentrates #ith the cons"mer
price inde(.Coke had negotiated this fle(ibility into its Aaster Bottling Contact in 1986,
and Pepsi had #orked price increases based on the CP% into its bottling contracts. 'o,
#hile the bottlers faced increasing price press"re in a slo#ing market, CPs co"ld contin"e
raising their prices. .espite improvements in per case costs, bottlers co"ld not improve
their profitability as a percent of total sales. 3s a res"lt, thro"gh the period of 1986 to
1997, bottlers did not gain any of the profitability gains en)oyed by CPs.
1- .hy have contracts +etween CPs an* +ottlers ta#en the form they have in the
soft *rin# in*'stry/
Contracts bet#een CPs and bottlers #ere strategically constr"cted by the CPs. 3ltho"gh
beneficial to bottlers on the s"rface, the contracts favored the CPsV long-term strategies in
important #ays.
>irst, territorial e(cl"sivity is beneficial to bottlers, as it prevents intrabrand competition,
ens"res bargaining po#er over b"yers and establishes barriers to entry. B"t it is also
beneficial to CPs, #ho are also not s"b)ect to price #ars #ithin their o#n brand. The
contracts also e(cl"ded bottlers from prod"cing the flagship prod"cts of competitors.
This created monopoly stat"s for the CPs, from the bottler perspective. 9ach bottler co"ld
only negotiate #ith one s"pplier for its premi"m prod"ct. Giolation of this stip"lation
#o"ld res"lt in termination of the contract, #hich #o"ld leave the bottler in a diffic"lt
position.
*istorically, contracts #ere designed hold syr"p prices constant into perpet"ity, only
infl"enced by rising prices of s"gar. This changed in 1988 and 1986, as contracts #ere
renegotiated, first to accommodate for rises in the CP%, and then to give general fle(ibility
to the CP Coke! in setting prices. Coke co"ld negotiate this more fle(ible pricing
beca"se its bottlers #ere dependent on it for b"siness. %t f"rther ens"red that its bottlers
#o"ld be captive to its monopoly stat"s by b"ying ma)or bottlers and then selling them
into the CC9 holding company, #hich #o"ld only prod"ce Coke prod"cts. Coke #o"ld
capt"re ;9M of the dividends from CC9, #itho"t the complications of vertical
integration.
BE3$. ?3E' 2> C2F9 3$. P9P'%
Advertising methods
Pepsi began showing people doing blind taste tests called The Pepsi Challenge in which
they preferred one product over the other, and then they began hiring more and more
popular spokespersons to promote their products.
They focused particularly on rock stars; notable soft drink promoters included Michael
Jackson (for Pepsi) and Paula Abdul (for Diet Coke). One example of a heated exchange
that occurred during the Cola Wars was Coca-Cola making a strategic retreat on July 11,
1985, by announcing its plans to bring back the original 'Classic' Coke after recently
introducing New Coke. Pepsi ads often focused on regular people, particularly the young
(and young-at-heart) and those in the future, choosing Pepsi over Coke, supporting
Pepsi's positioning as "The Choice of a New Generation."
In the late-1990s, Pepsi launched its most successful long-term strategy of the Cola Wars,
Pepsi Stuff. Consumers were invited to "Drink Pepsi, Get Stuff" and collect Pepsi Points
on billions of packages and cups. They could redeem the points for free, Pepsi lifestyle
merchandise. After researching and testing the program for over two years to ensure that
it resonated with consumers, Pepsi launched Pepsi Stuff, which was an instant success.
Tens of millions of consumers participated. Pepsi outperformed Coke during the summer
of the Atlanta Olympics - held in Coke's hometown - where Coke was a lead sponsor of
the Games. Due to its success, the program was expanded to include Mountain Dew, and
into Pepsi's international markets worldwide. The company continued to run the program
for many years, continually innovating with new features each year. Source: PROMO
Magazine
The Pepsi Stuff promotion became the subject of a lawsuit. In one of the many
commercials, Pepsi showed a young man in the cockpit of a Harrier Jump Jet. Below ran
the caption "Harrier Jet: 7 million Pepsi Points." There was a mechanism for buying
additional Pepsi Points to complete a Pepsi Stuff order. John Leonard, of Seattle,
Washington, sent in a Pepsi Stuff request with the minimum amount of points and a
check for over $700,000US to make up for the extra points he needed. Pepsi did not
accept the request and Leonard filed suit. The judgment was that a reasonable person
viewing the commercial would realize that Pepsi was not, in fact, offering a Harrier Jet.
In response to the suit, Pepsi added the words "Just Kidding" under the portion of the
commercial featuring the jet (see Leonard v. Pepsico, Inc.).
In 1986, Coca-Cola and Pepsi were launched into space aboard the Space Shuttle in order
to conduct a taste test. The companies had to design special cans for use in zero G
conditions. The experiment was classified a failure by the shuttle crew, primarily due to
the lack of refrigeration and gravity. Coke would later return to space with an improved
delivery system.[citation needed]
Second Cola War
During the 1990s, a "second cola war" was reported in the United Kingdom.[citation
needed] This time it was due to the launch of Virgin Cola, as well as Sainsbury's store
brand Classic Cola, which, unlike most store brand colas, was designed to look like a top
product worthy of competition. For a few years both colas were competitive with Coca-
Cola and Pepsi; at one point Coca-Cola even sued Sainsbury's claiming the design of the
Classic Cola can was too similar to Coke's. However, today, both Virgin and Classic Cola
are far behind the two major brands.
Pepsi)s *lo#al $trategi+ing (ollo,ing the Cola %ars
3s recently as 199/, Pepsi had a proprietary contract #ith the %ndian government, #hich
allo#ed it to be a cola provider in %ndia #itho"t competition from Coca-Cola. 'ince then
a paradigm shift has occ"rred in the %ndian government-s policies, #ith domestic
protectionism being replaced by global market competition. The proprietary contract #ith
Pepsi #as relin+"ished and Coca-Cola #as allo#ed to market its prod"ct in %ndia.
Pepsi-s e(perience in other parts of the #orld parallels its %ndian e(perience. %t #as
acc"stomed to en)oying a monopolistic position in 9astern 9"rope and <atin 3merica as
#ell. $o#, Coca-Cola is selling its prod"ct in these areas and giving Pepsi a r"n for its
money. These global developments necessitated Pepsi-s rethinking its strategic
orientation.
The rethinking in practice proved to be very e(pensive. The strategy developed #as to
capt"re a larger share of the global market thro"gh an international e(pansion
programme. %n 199;, Pepsi la"nched a ma)or offensive in Bra4il #ith a plan to sell more
than 0:/ million cases a year. %n 1996, the company #as nearly disgraced in Bra4il, #hen
its bottling company faced insolvency. Aean#hile Pepsi-s Gene4"elan e(perience #as
also painf"l, #ith its bottling company defecting to Coca-Cola aro"nd the same time. %n
Ae(ico as #ell aro"nd this time, the company-s main bottler #as s"staining heavy
operating losses. 3nd in 9astern 9"rope, it #as "nable to make m"ch head#ay beca"se
d"ring the Comm"nist era, it had en)oyed the patronage of Comm"nist leaders. %n the
post-Comm"nist era, it had to find its #ay in foreign c"lt"res entirely on its o#n. The
same #as the case in <atin 3merica. 3s the region started moving to#ards market
competition, Pepsi lost its competitive advantage, and had to find its #ay almost like a
ne# entrant.
%nd"stry analysts have been highly critical of the strategy Pepsi devised and
operationali4ed at this time. %ts foc"s #as on achieving a boost in sales in the short r"n,
instead of emphasi4ing a b"ild-"p of brand loyalty. %ts strategy #as characteri4ed by an
-all or nothing- or -go for broke- approach. %t also employed marketing tactics #hich may
have served it #ell in the 1nited 'tates, b"t #hich #ere o"t of synchrony #ith c"lt"res of
other co"ntries.
Bet#een 199/ and 199:, Pepsi managed to do"ble its international sales. This ho#ever
does not detract from the fact that its strategy #as not the best it co"ld have been. %n
Bra4il d"ring this time, it la"nched three glit4y marketing campaigns that it s"bse+"ently
had to )ettison. %ts main problem #as its inability to develop a net#ork of bottling
partners. The key to marketing s"ccess in a co"ntry like Bra4il, or %ndia, is not p"blicity
thro"gh circ"s-style advertising gimmicks, b"t point of p"rchase appeal. 3nd the latter
re+"ires mastery over a local distrib"tion system.
.espite all this, Pepsi remains a ma)or player on the global scene. %ts prod"ct +"ality is
"nchallengeable and it employs talented personnel. *o#ever, ind"stry analysts do believe
that ma)or problems e(ist in Pepsi-s strategic positioning, and its config"ration of vario"s
corporate plans. 1nderlying all this is a lack of honing of interc"lt"ral "nderstanding.
2-*ara-.everea"( and 5ohansen 199;! recommend that global companies entering into
interc"lt"ral strategic engagements be prepared to find -third #ays- of developing vision
plans and strategies. This -third #ay- emphasi4es the creation of a space #here all partners
have e+"al importance and are prepared to devise ne# #ays of #orking together. 2-*ara-
.everea"( and 5ohansen term this the -collaborative space-. These researchers s"ggest the
follo#ing pointers for the creation of a collaborative space&
The process of creating visions is as important as the vision itself. %t enables
managers to bond together, and to "nderstand ho# the other thinks and f"nctions.
The common strategy developed sho"ld be a living tool, capable of constant
adaptation as ne# realities present themselves.
Top management sho"ld be actively involved #ith the strategi4ing process, and
set the e(ample in being committed to the creation of a collaborative space.
There sho"ld be some gro"nd r"les for the cond"cting of strategy meetings
bet#een the top management teams of all partners. The e(istence of some
str"ct"re for the meetings enables people from all c"lt"res to cond"ct themselves
appropriately.
There sho"ld be database systems for storing information abo"t strategy
form"lation and implementation that all partners can access #ith ease. 'haring of
information is a key to making collaborative spaces viable. P"tting all relevant
information on the table allo#s players to accept or modify strategic plans in an
open environment.
3lterman 0///! has recommended that the feelings of the people concerned be kept in
mind #hen a decision is taken abo"t the management practices to be "sed by a strategic
collaboration straddling several c"lt"res. 3 collaborative arrangement may find it has t#o
billing systems, for instance. %t then has to choose. This might res"lt in employees from
one c"lt"re having to "se a system that #as developed in another c"lt"re. They co"ld take
the position that -o"r system is better than yo"rs-. 2r they co"ld transcend s"ch narro#
perspectives.
<erpold 0///! recommends the creation of a separate identity for the collaborative
arrangement, even if the arrangement is a temporary one, to solve this problem. This
offsets the complications that arise #hen several ethnic c"lt"res and at least t#o
corporate c"lt"res are )"(taposed. 1nfort"nately, according to <erpold, global
corporations entering into collaborative arrangements tend to neglect the people aspect.
%nstead financial matters are metic"lo"sly e(amined and their implications anticipated.
This #as the case #ith the BP-'tatoil strategic vent"re. The differences bet#een ethnic
and corporate c"lt"res t"rned o"t to be greater than anticipated, b"t initially they #ere
ignored.
BP is a British corporation, 'tatoil a $or#egian one. The British perceived the
$or#egians as being passiveL the $or#egians felt the British #ere aggressive. ?ith the
passage of time and the non-resol"tion of differences, it became necessary to engage in
damage control efforts. These incl"ded team-b"ilding e(ercises and c"lt"ral sensitivity
training. 'im"ltaneo"sly, an identity #as established for the collaborative arrangement.
3s the identity took hold, differences started to become less significant. 3nd managers
reported that they felt the #ork #as f"lfilling and the interc"lt"ral factor #as e(citing and
invigorating.
COLA WARS