Pepsi and Coca Cola have been competing against each other for the past four decades. These ‘wars’ have been such, that its called the Cola Wars.
For decades, both companies have been a part of marketing clashes. Each has shown its marketing ingenuity at various points of time, providing for an excellent treat for the beholders.
Coca-Cola, the drink was originated in 1886 by an Atlanta pharmacist, John S. Pemberton (1831–88), at his Pemberton Chemical Company. He was addicted to morphine, and in pursuit of finding a non-problematic drug, he ended up developing perhaps the most renowned-tasting soda of its time.
Seven years after this, Caleb Bradham, an American pharmacist, made a drink, which claimed to cure indigestion, and named it “Brad’s Drink.” In 1898, it was renamed ‘Pepsi-Cola,’ a conglomeration of a Greek word for indigestion, πέψη (pronounced as Pepsi) and ‘cola’ after the kola nut.
Like the beginning, quite a lot of things about these two present cola giants have been similar, but with fascinatingly different strategies.
When first introduced, it had a small amount of cocaine in it, but in the 1990s, amid the Temperance Movement, the company decided to be on the side of the anti-alcohol lobby, and then, in 1903, positioned itself as the ‘The Great National Temperance Beverage.‘
The market penetration of Coca-Cola has been nothing less than phenomenal.
From the very beginning, Coke’s advertising has focused on wholesomeness and nostalgia as the central tenet of its marketing strategies. Jill Richardson has rightly put; people do not drink Coca-Cola for the taste. They drink it because they associate it with positive things like friendship, fun, patriotism, and athleticism.
The company has focused quite heavily on making the brand synonymous with the positive values of its times.
Standing at 6th position on Forbes’s most valuable brands in 2019, the company is undoubtedly the Goliath of the soft drink sector.
The start of Pepsi was not as grand as Cola. Its founder, Caleb Bradham, was not precisely a businessman, and Pepsi-Cola went into Bankruptcy in 1923.
And ironically, it was through Coca-Cola only that Pepsi got revived:
Charles Guth was the owner of a major candy manufacturer, Loft, that operated Soda fountains in its stores. Coke had provided Guth with the Cola syrup of his choice for his business until it refused to give him the wholesale discount it wanted.
Guth, in search of viable alternatives, soon found Pepsi, which was on the verge of Bankruptcy, and saw an excellent business deal, and he didn’t even think twice before leaping to the opportunity of buying Pepsi’s assets out of his fund, establishing a new Pepsi Cola, one that would turn into the second largest soda company in the world
Where on the one hand, Coke focused its marketing campaigns on nostalgia and other ‘warm’ feelings, Pepsi has often emphasized the idea of itself as newer or more youthful—”the choice of a new generation.” Pepsi, many experts believe was founded to be the Apple to the Microsoft, the David to the Goliath that was Coca-Cola. And well, aren’t these two giving it their all.
The Competition :
By 1936, when Pepsi-Cola’s sales started skyrocketing, Coca-Cola, for the first time, realized that it had stiff competition. And so began the battle that soon turned into a war. War for the throne of the Soda regime.
Throughout the 1930s, Coca-Cola kept on playing on its wholesome image. It encouraged people to ‘take a pause’ and enjoy moments associated with the ‘American way of life.’
During world war II, Coca-Cola ran a series of ads to establish its brand as a patriotic one, greeting Americans, wherever they went, and reminding them of home.
Pepsi, on the other hand, continued with its strategy of targeting the youth of the Era. In its version of the ads of the World War, Pepsi claimed it provided energy to the American war efforts.
But, the unorthodox and creative mindset of the Pepsi creators came to the forefront in 1947, when it broke the taboo of addressing and showing black Americans in ads, who had next-to-no political or civil rights, though this was scorned-at in the Southern segregation states of the US, Pepsi managed to increase its sales among blacks in the South significantly.
The next two decades would primarily see several marketing strategies taken up by both companies, the other one retaliating with something among the same lines, and with Coca-Cola mainly focusing on the culture of the Country, and Pepsi, on the youth population of the Country.
The Pepsi Challenge:
In 1975, Pepsi started an ingenious marketing campaign, which aimed, and even succeeded to some point, at grabbing the market share away from Coke. They called it the Pepsi Challenge.
At malls, shopping centers, and other public locations, a Pepsi representative has two identical cups, one filled with Pepsi and the other, with Coke. Shoppers are supposed to take a sip from both the cups with a blindfold on, selecting the drink they like more.
All the Pepsi challenge concluded that more than 50% of tasters prefer Pepsi over Coca-cola.
Though Malcolm Gladwell, in his 2005 book, Blink: The Power of Thinking Without Thinking, denounced this challenge altogether, stating that a sip test can’t be a matrix for comparing soft drinks, still it didn’t stop Pepsi from gaining a large chunk of market share after this.
By 1985, Coca-Cola had been losing its market share for many years. Blind taste tests like the Pepsi challenge indicated that consumers preferred the sweeter taste of their rival Pepsi, and so the Coca-Cola recipe was reformulated. And ‘New Coke’ was introduced.
It would be no exaggeration to say that this was a total failure: Something which the company was not so habitual of going through.
And Pepsi took quite an advantage of this tactic taken by their competitor, with a 14% sale increase in one month, the largest in the company’s history.
Coca-Cola, though, was not one to back out. It understood its mistake, its director of corporate communications, Carlton Curtis, realized that their customers were upset about the withdrawal of the old formula more than the taste of the new one.
And so, in 1992, the company reintroduced Coke’s original formula, rebranded “Coca-Cola Classic,” which resulted in a significant sales boost. There was speculation that the New Coke formula had been a marketing ploy to stimulate sales of original Coca-Cola, speculation which the company denied.
And in this way, Pepsi and Roger Enrico realized how wrong they were.
The Cola wars were anything but over!
And the coming decade would be proof of the fact, as the popularity and the sales of the companies grow leaps and bounds.
Who has the upper hand, then?
The actual difference in Business Strategies :
It is a more or less agreed fact that the red can of Coca-Cola is one of the most popular products in the world. On the traditional soda front, though Pepsi has had a considerable share of the market, it would be fair to say that Coca-Cola has had an ‘edge.’
And the proofs are there for all to see.
While Coca-cola is on the 6th rank of Forbes’s most valuable brands, Pepsi stands at the 29th position.
But, even then, Pepsi is doing well, quite well.
As per a report by Forbes,
Its shares have risen to 49.20% in the previous five years, in massive contrast to coca-cola, whose same value is 22.13%.
Its revenues are roughly twice (64.98 billion dollars) than Coca-Cola (32.25 billion dollars)
Well, the reason extensively is one stated already. Coca-Cola worked harder than Pepsi to establish a global brand and has been far more successful in marketing its core product line (Coke itself), and in the process, never really got off to diversify its business in a product line other than soda.
Pepsi, on the other hand, after its merger with Frito-Lay in the 1960s, made a push into snack foods, a market in which Coca-Cola had never even ventured.
The diversification provided the company with two critical advantages over Coca-Cola.
First, size. The size of the snacks market is quite large and growing as compared to the carbonated drinks market,
And also, these led to Pepsi making a lot of complementary sales without much cost. Moreover, a customer buying a snack would be more likely to have a carbonated drink with it, and thus, the revenue of the company doubled without adding much to the cost.
Coca-Cola, as it seems, has understood the importance of this diversification, and in its quest, has announced its intention to acquire Costa Coffee, which promises to give the Cola giant a robust coffee platform across different parts of the world like Europe, Asia Pacific etc.
How will this acquisition turn out to be, only time will tell.
Okay…But who won?
Well, like many things in life, the answer to this question is also not easily found.
As far as colas are concerned, the red and white canned team did a touch better than the blue and white ones.
But as for overall company achievement, PepsiCo has done way better than Coca-Cola, even though its brand image is not even half as eminent as Coca-Cola’s.
The only answer to this question is that
“The game is still on!”
And we, as consumers, only stand to gain from this scuffle of the two Cola giants!