Jos Alejandro Espndola Michel

Cola Wars
Continue: Coke
and Pepsi in the
Twenty-first
Century
Exhibits

International Business

In this exhibit it shows the differences between the costs that are made
between Concentrate producers and Bottler. Case refers to 192 oz. that are
used for every dollar. More money goes in to bottler, since it is in charge of the
packaging and sweeteners, while concentrate producers just focuses on the
consistency required for the making of the flavors for the drinks. Concentrate
producers and bottlers kept a relationship with more than one supplier.
Concentrate producers offered bottlers rebates to encourage them to purchase
and install vending machines with their product. 60% of the products were
packaged in metal cans because they are easy to handle, stocked, and
displayed, as well as they are lightweight, durable and recyclable.
Concentrate producers are those that require a few inputs like: the concentrate
for most regular colas which consist of caramel coloring, phosphoric and citric
acid, natural flavors, and caffeine.
Bottlers purchased two majors inputs:
1) Packaging: ($3.4 billion in cans, $1.3 billion in plastic bottles, and $0.6 billion
in glass)
2) Sweeteners ($1.1 billion in sugar and high fructose corn syrup, and $1 billion
in artificial sweetener.)

This chart shows the difference in Pricing that Coke and Pepsi based their
concentrate prices on. Coke and Pepsi each had different pricing standards, but
they both based their prices to these volume statistics. As you can see, in the
year 1988 their retail price per 288 0z case was of $8.78, but by the year 2000,
it was $9.08. It had raised $.03. Their concentrate price in 1988 was $.79, but
in the year 2000, it was $.5 more. The difference between the year 1988 and
2000 shows an increase in the products prices, but it isnt a huge increase. Just
by a couple of cents. The total difference in the change in CPI is 46%.

Retail outlet is a store where the product is sold in smaller quantities to the
public. (Not in huge masses). So by this chart, we can see how much of CSDs
were offered in each market.
The market which had the highest percentage of industry in volume is Food
Stores which includes supermarkets (15%-20% gross margin and 3-4% in food
store revenues.) the next highest is Vending machines, with 23% of industry
volume. Out of Pepsi and Coke, Coke is the one with leading shares of channel
in Food stores, Fountain Sales, Vending machines, and Other in comparison to
Pepsi which has leading shares in convenience stores. Vending machines has
the highest profitability per case.