Cola Wars

9-711-462
REV: MAY 26, 2011

DAVID B. YOFFIE
RENEE KIM

Cola Wars Conti
inue: Coke an Peps in 201
C
nd
si
10
Fo more than a century, Co and Pepsi vied for “th
or
oke
hroat share” o the world’s beverage m
of
s
market.
The most intense battles in the so-called col wars were fought over the $74 billio carbonated soft
m
b
la
e
on
drink (CSD) indus
stry in the Un
nited States.1 In a “carefu
ully waged co
ompetitive str
ruggle” that l
lasted
from 1975 through the mid-199 both Cok and Pepsi a
h
90s,
ke
achieved ave
erage annual r
revenue grow of
wth
nd
oth
w
SD
tion rose stead year afte year.2 Acco
dily
er
ording
aroun 10%, as bo U.S. and worldwide CS consumpt
to Rog Enrico, fo
ger
ormer CEO of Pepsi:
f
The warfare must be per
e
rceived as a continuing ba
c
attle without blood. Witho Coke, Pep
out
psi
wo
ould have a to
ough time bei an origina and lively c
ing
al
competitor. T more succ
The
cessful they are,
the sharper we have to be. If the Coca-C
e
e
Cola company didn’t exist we’d pray for someone to
y
t,
inv
vent them. And on the ot
A
ther side of the fence, I’m sure the fo
t
m
olks at Coke w
would say th
hat
no
othing contrib
butes as much to the pres
sent-day succ
cess of the Co
oca-Cola com
mpany than . . .
Pe
epsi.3
Th relationsh began to fray in the early 2000s, ho wever, as U.S per-capita CSD consum
hat
hip
f
S.
mption
started to decline. By 2009, the average Ame
erican drank 4 gallons of CSDs per year, the lowest CSD
46
t
consu
umption level since 1989.4 At the same time, the tw companies experienced their own di
l
wo
istinct
ups and downs; Coke suffered several operational setba
a
C
d
acks while Pepsi charted a new, aggre
essive
course in alternativ beverages and snack acq
ve
quisitions.
As the cola wa continued into the 21s century, Co and Peps faced new challenges: C
s
ars
d
st
oke
si
Could
they boost flagging domestic CSD sales? Ho could they compete in the growing non-CSD cat
b
g
ow
y
tegory
that demanded di
d
ifferent bottli
ing, pricing, and brand s...