Cola Wars Continue: Coke

and Pepsi in 2006

Presented by :
• Adarsh Ranjan – 18PGHR05
• Atrija Gaur – 18PGHR15
• Gokul Nair – 18PGHR25
• Palash Jhawar – 18PGHR35
• Sundar Ganesh – 18PGHR60
• Varun Contractor – 18PGHR55
 INDUSTRY OVERVIEW
Introduction Process Flow
• CSD – Beverage Industry
• $66 billion industry
Concentrate
• American consumption – 23 Producers Retail Channels
gallons of CSD in 1970
• Coca-Cola’s dominance in
market share
 History of Cola 1938
Rivalry 1950 Coke’s Suit Pepsi’s “Beat
● ●

Against Pepsi Coke” motto

Early History 1960s

Cola Wars Begin
●
Cola – 1886 – John Pemberton
Beginning ●
Pepsi – 1893 – Caleb Bradham

●
1891 – Merchandise 7X
Coca-Cola ●
1916 – infringement problems

1965 • Pepsi Merges

with Frito Lay
1910 – adopted bottling franchise
Pepsi
●

●
1923 – declared bankruptcy
 Cola Wars Heat up
• 1974 - “Pepsi Challenge” was a huge hit – eroded Coke’s market share
• Mr. Goizueta named CEO; Coke Changed from sugar to fructose syrup
• Coke intensified it marketing expenditure – Pepsi followed suit
• 1980 - Coke’s bottler acquisition – CCE formed – followed by Pepsi to form
PBG
• 1982 – Diet Coke launched – Huge success
• 1985 – Coke announces change in formula – Pepsi celebrates
• Through 1980s, new CSD products were introduced. Coke-11 and Pepsi-13
• 1995 – Cadbury Schweppes bought Dr.Pepper, Orangina and Nantucket
Nectars
 …Cola Wars Stay Heated Up
• Late 1990s – Demand for CSD started levelling off – sales grew by only 1% every
year
• 1997 – Coke lost a discrimination suit, underwent financial shocks, laid off 7000
employees, lost to Pepsi in several acquisitions.
• 2000: Pepsi acquired Quaker Oats
• 2004: Coke’s revenue did not grow while Pepsi had a 3% y-o-y growth
• This also marked the period when people started becoming health conscious.
Pepsi started shifting aggressively to non-CSD products. Coke struggled with
internal and bottler issues
• During this period Pepsi outperformed coke in every area but Coke managed to
remain the leader in US and international markets
Market Share
Percentage of Domestic(USA) and International
Price Changes (%) in CSD Industry from 1988-2004
Market Share • Concentrate price – 3.6%
• Retail Price – 1.6%
60
This stark difference in price change was the main
50 reason for difference of opinion among concentrate
producers and franchisers
40

30

20

10
International Market Share
0 US Market Share
Coke Pepsi Schweppes

US Market Share International Market Share

Strengths
Weaknesses
• Current market leader
with47% of global sales • Greater reliance on
in CSD CSD model
• Distribution strength in • Executional difficulties
Europe & Latin America • Complicated
• Brand Value relationship with
bottlers
Opportunities Threats
• Drinking water • Legal problems
segment • Contamination Scares
• International market • Growing health
conscious society
• Health oriented
• Pepsico’s strong
product segment products like Tropicana,
Aquafina etc.
Strengths Weaknesses
• Good relationship with • Comparatively less
bottlers global presence
• Diversified products • Comparatively less
• Second best CSD market share
company in market
share
• Aggressive marketing
strategies
Opportunities Threat
• Taking over CSD & non- • Health conscious
csd companies consumers
• Non-CSD market • Competition from
Coke
 Recommendations
• Diversify and focus more on non-csd products
• Infuse R&D teams with funds to develop products for health
conscious customers
• Target growing countries
• Keep going with the current marketing strategy
• Diversify into milk products
• Resolve problems with bottlers – come to a consensus
• Make sure price rise of concentrates equals the retails price change
THANK YOU