Cola Wars Continue: Coke vs. Pepsi in the 1990s
"Carefully waged competitive struggle" is the description given to the competition between Coke and Pepsi. This industry is worth $48 billion in the US only, this amount will not increase in the future, therefore the Colas wars are heading towards international markets. Coke owns 45% share of the worlds market, 80% was earned abroad in 1993; whereas Pepsi has only 15% share overseas. This urged both companies to use a peaceful warfare to compete which had continued through the nineties.
Soft drinks consisted of: flavor base, sweetener, and carbonated water. On the other hand, there are main participants in the cola industry: concentrate and syrup producers, bottles, and distributors. 1-Concentrate Producers (CP): They blended the needed raw, then packaged in plastic canisters, and then shipped to the bottler. This process needed little capital investment in machinery, overhead or labor. 2- Bottlers: They added carbonated water and high fructose corn syrup then bottled the soft drink and delivered it to customer's accounts. It is worth mentioning here that only Coke added sugar before shipping thee blend to the bottlers. This process was capital-intensive.3-Distributors: In 1993, Pepsi-Cola and Coca-Cola each had a 16% share of all retail channel volume, and the main distribution channel for soft drinks was supermarkets. Historically, Pepsi focused on sales through retail outlets, while Coke on fountain sales. Suppliers: CPs and bottlers purchased two major inputs: packaging, and sweetens .When diet soft drinks were introduced; Pepsi and Coke negotiated with artificial sweetener companies and sold its concentrate to bottles already sweetened.
History of the Cola Wars: Many fr...
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...se trends, Pepsi pronounced itself a “total beverage company,” while Coca-Cola appeared to be moving in the same direction.
Internationalizing the Cola Wars. : In the 1990s, some of the most intense battles of the cola wars were being waged in international markets. Pepsi had company-owned bottlers in many international territories, while Coca-Cola made equity investments in franchisees. There were barriers to growth in many countries including price controls, lack of remittable profits, foreign exchange controls, political instability, restrictions on advertising, raw material sources, and environmental issues. Pepsi utilized a niche strategy which targeted geographic areas where per capita's were relatively established and the markets presented high volume and profit opportunities. These were often “Coke fortresses,” and Pepsi put its guerilla tactics to work.
This case describes the complexity of PepsiCo's competitive position in the Mexican soft-drink market during the late 1990's. Between 1993 and 1996 PepsiCo and Coca-Cola waged a classic cola war in Latin America. The goal for both companies was to gain market share and by the end of 1996, Coca-Cola had clearly won the Latin America cola war. In 1993 PepsiCo enjoyed a 42% market share in Venezuela thanks to the success of its bottling partner, the Cisneros Group but by the end of 1996, PepsiCo held less than 1% of the Venezuelan cola market. Following PepsiCo's anchor bottler in Mexico, Gemex, the case details the strategies employed by PepsiCo's senior management beginning in 1993 to expand its market share versus Coca-Cola. The various dimensions of PepsiCo's strategy -- marketing, management, financial, strategic - seemed to have deteriorated in the aftermath of the unexpected fall in the Mexican peso in December 1994. Focusing on the financial implications of the peso devaluation, the case then describes PepsiCo's response, which only seemed to increase the financial burdens imposed on the faltering Pepsi market share.
Pepsi was first represented in the beginning of 1890 with the purpose to relieve indigestion. Not until 1960’s, Pepsi received successes that competed against Coca-cola. Pepsi has always been a drink for the young generation, but now they want to change the association.
Coke continuously out-stands Pepsi, even though they share a very similar taste and colour, however Coke should not be the drink that receives all the love and attention for what it offers. Despite their similar soda colour, the drinks actually contain some different ingredients, which produce a different taste, and affect the body differently. Furthermore, the way the companies markets their drinks makes a huge contribution to how successful their products will become. The major element for success however stems from their impact on society and how the companies utilize their social power to evolve. The two major soda companies are constantly head to head with one another, yet it is what they do that sets them apart.
The Coca-Cola Company - American multinational corporation operates in a nonalcoholic segment of Beverage Industry. The history of the industry goes back to the 17th century, when the first marketed soft drink came to the Western Market.
Coca cola has always dominated the markets outside United States unlike Pepsi’s internationalization strategy that took too long. Therefore, the long-term brand of Coca cola and better pricing strategies would help in competing with Pepsi. Unlike, Pepsi, Coca cola had targeted entering into partnership and alliances with local distributors and firms. This helps to develop strong relationship within the domestic firms to reduce the domestic barriers and thus, enhance the company’s competitiveness (Thabet, 2015). Lastly, the Asian markets consist of related and supporting industries to the soft drink industry that helps the companies in gaining a strong competitive position in the markets. Based on the competitive advantage of nation’s model, Coca cola has more home based advantages to develop a competitive advantage in relation to other countries on a global
Analysis of the Coca-Cola Company The Coca-Cola Company is the world's leading manufacturer, marketer and distributor of soft-drink concentrates and syrups. The Coca-Cola Company is the world's leading manufacturer, marketer and distributor of soft-drink concentrates and syrups. The Company markets many of the world's top soft drink brands, including Coca-Cola, Diet Coke, Sprite and Fanta. Through the world's largest and most pervasive distribution system, consumers in nearly 200 countries enjoy the Company's products at a rate of more than one billion serving a day.
CASE 1-3: Coke and Pepsi Learn To Compete in India The political environment in India proved critical in that their government was unfavorable to foreign investors. They prohibited the import of soft drinks since they felt it could be gotten anywhere. They also prohibited the foreign brand name and wanted the name Lehar Pepsi and Coca-Cola India, an indigenous name. These effects couldn’t have be anticipated prior to entering the market because the trade policies, rules and regulations of India were difficult and unpredictable.
Control of market share is the key issue in this case study. The situation is both Coke and Pepsi are trying to gain market share in this beverage market, which is valued at over $30 billion a year. Just how is this done in such a competitive market is the underlying issue. The facts are that each company is coming up with new products and ideas in order to increase their market share.
Bottling Network: Both Coke and PepsiCo have franchisee agreements with their existing bottler’s who have rights in a certain geographic area in perpetuity. These agreements prohibit bottler’s from taking on new competing brands for similar products. Also with the recent consolidation among the bottler’s and the backward integration with both Coke and Pepsi buying significant percent of bottling companies, it is very difficult for a firm entering to find bottler’s willing to distribute their product.
Emily N. Gehring Mrs. Lesa Bartel 9th grade English 15 April 2015 In 1886 the brand of “Coca-Cola,” was released to Americans which would change the face of the beverage business as we know it today. Little did they know that in the next following years they would have the largest competitor in the beverage industry trailing right behind them, Pepsi. With both sodas tasting the same it was a race to see who could get to the finish line first or in this case get their product to sell faster, this began the takeoff of the Cola Wars. The production of Coca- Cola and Pepsi are relying on their source of advertising and competition, the Cola War shows just how much each of these competitors wanted to win.
Coke and Pepsi have been raging war for over a century now, turning their sodas into a multi-billion-dollar industry. Coke has been able to drive more earnings for its bottom line, and while Coke’s net income has been trending downward in recent years, it manages to stay ahead thanks to superior margins. Pepsi, on the other hand, has produced consistent net profit margins of around 10%, while Coke margins have been in the 15-18% range for the past several years (O’Brien). Every company has a Market Cap, which is basically a fancy way of saying how much the company is worth, and Coca-Cola’s market cap is a whopping $180 billion. Pepsi’s Market Cap is $150 billion, which may not seem like a big difference, but $30 billion is a lot of cheddar. Therefore, Coca-Cola owns 51% of the soft drink market, whereas Pepsi only owns 22% of it. Coke claims to own a total of 35 different brands, including Fanta, Sprite, Powerade, Vitaminwater, and many others. Pepsi owns 22 different brands, including 7up, Gatorade, and Mountain Dew “Coke (Coca-Cola) vs Pepsi - Soda
There are a variety of beverages available to us today with a wide range of differences, some are flavored, carbonated, low calorie, energy boosters, and just plain water. When it comes down to carbonated drinks there are two major rivalry soda companies dominating the market. Coca Cola and Pepsi are two well know cola distributors with very credible history, but the question still remains one is America’s favorite? With the ongoing competition between Coca-Cola and Pepsi, each company is incorporating new strategies for marketing and advertising there brands. When comparing an advertisement from each of the companies, we will review how they appeal to consumers.
The purpose of this report is to compare financial reports from the two largest soft drink manufacturers in the world. The Pepsi Co. and Coca Cola have been the industry's leaders in their market since the early 1900's. I will use relevant figures to determine profitability, and break down key ratios in profitability, liquidity, and solvency. By breaking down financial statements, and converting them to percentages and ratios, comparisons can be made between competitors regardless of size.
The case study "Cola Wars Continue: Coke and Pepsi in the Twenty-First Century" focuses on describing Coke and Pepsi within the CSD industry by providing detailed statements about the companies’ accounts and strategies to increase their market share. Furthermore, the case also focuses on the Coke vs. Pepsi products which target similar groups of customers, and how these companies have had and still have great reputation and continue to take risks due to their high capital. This analysis of the Cola Wars Continue case study will focus mainly on the profitability of the industry by carefully considering and analyzing the below questions. Why is the soft drink industry so profitable? Compare the economics of the concentrate business to the bottling business: Why is the profitability so different?
Yoffie D.B., & Kim K., Cola Wars Continue: Coke and Pepsi in 2010, Harvard Business School, 2011