The Cola War

7/29/2019 The Cola War

http://slidepdf.com/reader/full/the-cola-war 1/23

COLA WARS CONTINUE:

COKE AND PEPSI

Presented by:

“Group 1”

Rohit

Anup

Mohit

Rebecca

Vinoliya

NazareineKarthik

Bharath

Deepika

Ajay

Batch F12Section A



History of Coca-ColaCoca-Cola was formulated in 1886 by pharmacist John

Pemperton who sold the product at drug stores as “potion for

mental and physical disorders.”In 1891, Asa Candler acquired the formula, established a

sales force and began brand advertising of Coca-Cola.

In 1919, went public under control of Robert Woodruff

expanded and developed in national and internationalmarkets.

Successful during WWII with the high CSD consumption

from the U.S soldiers.



History of Pepsi Pepsi was created in 1893 in North Carolina by

Pharmacist Caleb Bradham.

By 1910 Pepsi had built a network of 270 bottlers. Pepsi struggled and declared bankruptcy twice

During Great Depression grew in popularity due to pricedecrease to a nickel.

In 1938, Coke sued Pepsi-Cola brand for infringement onCoca-Cola’s trademark.



U.S. Liquid Consumption Trends

0

10

20

30

40

50

60

1970 1981 1990 1996 2000 2003

CSD

Alcohol

Milk

NCSD



A Century Of COLA WARSCoke and Pepsi fight for market share

They have to compete with other CSD's

US consumption drops

Concentrate makers made “customer developmentagreements “ with Walmart,etc

Fragmented industry changes dramatically

Coke and Pepsi share a market of 74.8%

Coke starts franchise deals



Coke picks up

McDonald's

Burger King Wendy's

Pepsi has

KFC Taco Bell

Pizza Hut

Subway is taken by Coke from Pepsi and Quiznos is takenfrom Coke by Pepsi



The war then moved to vending channels

Next a campaign battle began with Pepsi targeting the

“young at heart” and Coke uses “No wonder Cokerefreshes best”

The experimental stage was not far behind:

Coke launches Fanta, Sprite, Minute maid and Tab

Pepsi launches Mountain Dew, Diet Pepsi



Pepsi doubles its share in the US while Coke struggles tocompete

Coke tries to overcome this phase by reducing costs andchanging the 99-year old recipe; but fails and has toretain the classic Coke

The war moves on to flavours and different packaging

Coke tries to refranchise



The war goes on but Pepsi seems to flourish

Both brand do better in the packaged water business

Coke flourished in the international markets

Teas, coffees, juices, and flavored water made up themajority of Japan's 200-plus Coke items, and Coke‟slargest-selling product there was not soda but cannedcoffee



STP



Segment Middle and upper middle class people

Target Group The younger generation (15 to 35 years of age)

Positioning As a food and beverage brand with multiple products catering to the

youth

Pepsi



Coca-Cola

Segment Anyone who needs a beverage for any occasion

Target Group All age groups, from kids to adults

Positioning A beverage brand for the entire family



THE COLA WARS BEGIN

1970



• 1970sPepsi launched „Pepsi challenge‟ in Texas where Coca Cola was predominant.

By this campaign, Pepsi‟s sales shot up. This encouraged them to roll out the campaignnationwide.

Coca Cola countered this by launching advertisements questioning the validityof the tests in the campaign.

• 1980sCoca Cola switched from using sugar to using high-fructose corn syrup, a

lower-priced alternative. Coke also intensified its marketing effort by doubling it‟s

advertising expenditures over the period between 1981-1984. Pepsi in turn doubled it‟sadvertising expenditures during the same period.

In April 1985, Coke announced that it had changed the 99-year old Coca Colaformula. On the day of Coke‟s announcement, Pepsi declared a holiday for its employees,claiming that the new Coke mimicked Pepsi in taste.

Coke introduced 11 new products, including Caffeine-Free Coke and CherryCoke. Pepsi introduced 13 new products, including Lemon-Lime Slice and Caffeine-FreePepsi-Cola.

Growth of Coke and Pepsi squeezed the growth of smaller concentrateproducers.



Brand

What do you think a brand is? Customers' experience and the expectation you set when doing business with your

company

It‟s a promise!!

Where do you think it is built? In the minds of your consumer

Its established once..

the consumer experiences it, believes in your brand promise and developsperceptions of it.



Pepsi claws its way back

Pepsi challenge Coke had an iconic brand image and Pepsi used their research findings on taste

to their advantage

Coke the early adopters and Pepsi the copy cat rival It was a strategy Pepsi were happy to adopt

Targeted a particular segment in the market

Focused on Emerging markets rather than going head on with Cokeon already established markets

But Pepsi set themselves apart where it was relatively difficult to copy:

Strategic mergers and acquisitions

Introduced a portfolio of products

STRATEGIES USED BY COKE AND



STRATEGIES USED BY COKE ANDPEPSI

Coke rolled out fridge pack(12 can pack),Pepsi followed suit withfridge mate package

1.5 and 2 litre capacity pet bottles to boost per ounce pricing

Coke - Western Europe and Latin AmericaPepsi- Middle East and South east Asia

Use of small returnable glass bottles to enhance market penetration

in China and India



CURRENT SCENARIO

COCA COLA PEPSICO



COCA-COLA PEPSICO

• Largest manufacturer, distributor andmarketer of non-alcoholic beverageconcentrates and syrups in the world

• Partially owns its bottlers, giving it moreflexibility and control over its distributionchannels and product displays on

shelves

• 43% of market shares in the States • 31% of market shares in the States

• 75% of its revenue comes from outside American borders. An impressiveperformer in Mexico, China, Brazil, andthroughout Europe

• Dominates in countries like India,Canada and many of the Arab nations. Also racking up market share in Russiaafter acquiring Wimm-Bill-Dann Foods

• Earns more on beverage sales thanPepsi

• Makes up this difference in its diversifiedproduct line including snacks andrestaurants

• Gross profit margin: 64.4% • Gross profit margin: 55.9%

• EBITDA margin: 26.2% • EBITDA margin: 18.0%



Conclusion

“The warfare must be perceived as a continuing battle withoutblood. Without Coke, Pepsi would have a tough time being anoriginal and lively competitor. The more successful they are

the sharper we have to be. If the Coca-Cola company didn‟texist, we‟d pray for someone to invent them. And on the otherside of the fence, I‟m sure the folks at Coke would say nothingcontributes as much to the present-day success of the Coca-

Cola company than……..Pepsi.”

-Roger Enrico, former CEO of Pepsi

The Cola War

Documents

Transcript of The Cola War