The story of Pepsi; Defeating Coca-Cola in the Coke War

There was a pharmacist named Caleb Bradham from North Carolina, USA.

He experimented with mixing different ingredients to make a soft drink.

Then he made a black drink that mixed carbonated water with sugar, vanilla, oil and cola nuts.

There he gave his name. It's called 'Brad's Drink'. The drink was soon renamed Pepsi-Cola.

This is how the company now called PepsiCo started. It's from 1898

But Pepsi-Cola was second. It is because of the beverage called Coca-Cola, which was founded in 1886 12 years earlier.

In 1904, not long after Pepsi Cola started business, Coca-Cola was already selling 1 million gallons (about 3.79 million liters) a year.

Pepsi-Cola tried everything it could to beat Coca-Cola, but it was in vain.

However, the company that is always in second place has a wide range of moves.

If you can't beat the 1st place no matter how hard you try, you tend to think outside the box. In English, it is often called ‘Think outside the box’.

In this article, we'll take a look at how PepsiCo won the Coke War and ultimately defeated Coca-Cola.

Pepsi Merged with Fritolay.

There are snack companies famous for Cheetos, Doritos, Sun Chips, and Ruffles. It's a company called Fritolay.

Few people know that this company is a subsidiary of PepsiCo. PepsiCo merged with Fritolay in 1965 to form PepsiCo.

At the time of the merger, Fritolay was more intent on getting help from PepsiCo.

Because we were able to expand our sales network by using Pepsi-Cola's network.

PepsiCo was planning to sell the two products together by displaying the savory Cheetos, Doritos and Pepsi Cola next to the Ruffles potato chips.

When I eat salty snacks, I think of soft drinks. In this way, PepsiCo was reborn as a food and beverage company with the word ‘sik’ in front of it from a simple beverage company.

PepsiCo's takeover of snack companies could be viewed as an admission of defeat in the cola market.

To that extent, Coke was a symbol of American consumer culture.

And at the heart of it was Coca-Cola. Pepsi-Cola was in second place anyway.

Cola War 

Of course, PepsiCo never gave up on the cola market.

Since the 1970s, PepsiCo has emphasized the fact that Pepsi Cola tastes better through blind test tastings with the eyes closed.

It's called the Pepsi Challenge. Many of the tasting participants agreed with Pepsi, saying that Pepsi Cola tastes better.

To be precise, there were a little more people who supported Pepsi by a ratio of 53 to 47.

Generally speaking, Coca-Cola has a strong tangy taste and Pepsi-Cola has a strong sweetness.

Not only this. Pepsi starts to appeal to the younger generation by using the best star Michael Jackson as advertising models.

In the midst of this, Pepsi Cola was still in second place. Even when Diet Coke came out, Pepsi Cola fell to third place. That is why Coca-Cola's stronghold was great.

PepsiCo's diversification

PepsiCo started to engage in mergers and acquisitions to diversify again in the 1990s.

In 1998, it acquired the orange juice brand Tropicana, and in 2001, it acquired the food company Quaker Oats.

Quaker Oats was not acquired simply because it was a food company.

That's because there's a brand called Gatorade, a sports drink.

In this way, PepsiCo has a lineup that can compete with Coca-Cola's brand 'Powerade'.

Then something amazing happens. In 2004, for the first time in the two companies' more than 100 years of history, PepsiCo surpassed Coca-Cola in sales.

In 2005, the market capitalization will exceed that of Coca-Cola. This was not simply due to PepsiCo's business diversification.

People are drinking less soda because they are health conscious.

It also worked great. Even developed countries such as the United States, where obesity is a social problem, impose a tax on carbonated drinks in the name of a soda tax.

Until the 1990s, Coca-Cola was only focused on the carbonated beverage market.

The soda market seemed to expect that it would never stop growing.

But the world has changed. In the meantime, PepsiCo, which had been poke around to see where it was in second place, had a lot to sell other than soda, but Coca-Cola, which had only dug a well, had no other products to offer other than Coke.

In addition to cola, carbonated beverages such as Fanta and Sprite were mostly drinks.

At that time, the reversed sales are now more than doubled for PepsiCo.

Importantly, more than half of PepsiCo's sales come from Fritolay's snacks.

The merger that took place 50 years ago and changes in the carbonated beverage market played an important role in reclaiming the No.

PepsiCo's sustainability management

PepsiCo's sustainability management I think we should spur further growth by driving the momentum that beat Coca-Cola...

PepsiCo for some reason turns around here. Conversely, we focus on sustainability management.

Indra Nooyi, who became PepsiCo's first female CEO in 2006, begins what she calls 'Performance with Purpose', a business that delivers financial performance while meeting the needs of all stakeholders.

In a way, it was a slightly bizarre and unexpected strategy to the extent that it was thought that it was the expression of second-class DNA.

Purposeful performance produces healthier and nutritious food and beverages by reducing sugar, salt and fat in PepsiCo products, while conserving water, reducing carbon emissions and plastic waste, while also achieving superior financial performance, reducing our environmental impact. We aim to nurture talent within the company and in the local community.

This strategic direction of CEO Nooyi brings good results while interlocking with the new trend of the 21st century that considers health and the environment.

Although it is still second behind Coca-Cola in the Coke market, it is in a much more stable and advantageous position as a company.

Coca-Cola's odds.

Although it is declining, the North American carbonated beverage market is still
It's a $81 billion market.

Although the water ($23 billion) and sports drinks ($9.4 billion) markets are growing, they are still new to the soda market.

So Coca-Cola is still alive and well. However, it is different from the strategy of the past, which insisted on only carbonated drinks.

In 2018, it introduced a whopping 600 new products, of which 250 were sugar-free or reduced-sugar and 400 were non-carbonated beverages such as juices, teas and water.

But Coca-Cola's biggest draw is none other than coffee.
(It's still a drink.)
Coca-Cola acquired Costa Coffee, a British coffee shop, for $5.1 billion in 2018. It was the largest M&A in Coca-Cola's history.

It can be said that Coca-Cola has been reborn as a ‘comprehensive beverage company’.

Unlike Starbucks, which is number one in the United States and Asia, Costa Coffee has an edge in Europe and Africa and has many stores in China.

In addition, the acquisition will open an offline store that Coca-Cola does not have.

It is expected that Coca-Cola's entry into the coffee business will provide a new breakthrough for Coca-Cola instead of the shrinking carbonated beverage market.

The competition between PepsiCo and Coca-Cola shows how important it is to change together in an ever-changing market.

But the competition between the two is no longer limited to the carbonated beverage market.

They each left the carbonated beverage market to create a stronger growth engine. How will the two companies respond to the changing market in the future?