EXECUTIVE SUMMARY

Marketing warfare is a term used to describe some of the techniques and tactics
marketeers use in their everyday language. There are two types of force a business can
use against it's competition. The first is offensive attack and the second is defensive
attack.
Frontal attack, Flanking, Encirclement, Bypass and Guerilla warfare are some
examples of an offensive marketing warfare strategy. When using the offensive strategy
it is important to remember three important principles: 1. The main consideration is the
strength of the leader's position. 2. Find a weakness in the leader's strength and attack at
that point. 3. Launch the attack on as narrow a front as possible (Ries, 1986).
Defensive marketing warfare involves employing those tactics and strategies to
maintain the market share a company has already achieved. There are three important
guidelines to remember in defensive marketing warfare: 1. Only the market leader
should consider playing defense. 2. The best defensive strategy is the courage to attack
yourself. 3. Strong competitive moves should always be blocked (Ries, 1986).
Some examples of current marketing warfare can be seen in the cola, beer and
burger wars. Through observing these market segments, a marketer can see marketing
warfare in action.
All in all, marketing warfare is something each marketer will experience in his
marketing career. In order to be a successful marketer it is important to have a complete
understanding how to win the marketing war.

MARKETING WARFARE
INTRODUCTION
Marketing Warfare is a term used to describe some of the techniques and tactics
marketeers use in their everyday language. First, there are two types of force a business
can use against it's competition. The first is offensive attack and the second is defensive
attack. Before a person can understand the concept of marketing warfare they must
understand the terms which are associated with this type of marketing strategy.
The ideas behind attack and defend are two very different ideas. Attack basically
means to seek more than one has, moreover to take what someone else possesses (Kotler,
1981). Defense means to protect what one has already acquired.
OFFENSIVE MARKETING WARFARE
Frontal attack, Flanking, Encirclement, Bypass and Guerilla warfare are some
examples of offensive strategy. When using the offensive strategy in marketing warfare,
Al Ries and Jack Trout suggest three offensive principles which include: 1. The main
consideration is the strength of the leaders's position. 2. Find a weakness in the leader's
strength and attack at that point. 3. Launch the attack on as narrow a front as possible
(Ries, 1986).

FRONTAL ATTACK
Frontal attack occurs when a company takes all of their forces and face them
directly opposite of the opponent (Kotler, 1981). In order to be successful with this type
of an attack, statistics show that a factor of five to one is needed for a successful frontal
attack (Kotler 1981). For example, in the 1970's three electronic giants tried to attack
IBM head on against their stronghold on the mainframe computer market (Kotler, 1981).
Each electronic corporation failed because they used a pure frontal attack against IBM's
massive stronghold.
There are many types of frontal attacks including: a pure frontal attack, a limited
frontal attack, price based frontal attack, and research and development based frontal
attack (Kotler, 1985). A pure frontal attack involves matching a competitors product in
all areas of marketing (Kotler, 1985). The product is matched price versus price,
promotion versus promotion, characteristic versus characteristic and so on. Basically, a
pure frontal attack is taking a "look alike" or "me too" strategy (Kotler, 1985). When
using a pure frontal attack, companies should be prepared to expend large sums of
money.
The next type of frontal attack is the limited frontal attack. A limited frontal
attack focuses on specific customers and tries to lure them away from competitors
(Kotler, 1985). One example of a limited frontal attack may occur when a new product
enters the market such as a new type of paint. The paint company would pursue a select
number of their competitor's customers and bring them in on a whole number of product
dimensions simultaneously (Kotler, 1985).
Another type of frontal attack is the price based frontal attack. In priced based
frontal attack, the aggressor focuses mainly on the price of a product to gain more
customers. Every product characteristic is matched; however, the competition beats his
competitor on price (Kotler, 1985).
Finally, research and design is a fourth type of frontal attack. This is a more
difficult type of attack to employ. The competitor tries to reduce production costs,
improve the product, and other characteristics which would enhance product value
(Kotler, 1985). With this type of attack, more creative ideas are implemented which
allow for a better product.
There are three conditions that need to be met by a firm before it embarks in a
frontal attack (Kotler, 1985). First, the firm needs an adequate amount of resources to
support the attack (Kotler, 1985). Second, the firm must be able to create and sustain a
competitive advantage over it's competitors (Kotler, 1985). Finally, the company must be
able to persuade their competitor's customers to try their product and become their loyal
customer. In the frontal attack, it is important that everyone in the firm and those who
purchase the product perceive a competitive advantage (Kotler, 1985).
FLANKING MARKETING WARFARE
A second type of offensive strategy is the flanking strategy. In a flanking
strategy, a company focuses it's forces on the weaker sides of it's competitor (Kotler
1981). Three principles of flanking warfare are mentioned in Al Ries and Jack Trout's
book, Marketing Warfare. These principles are: 1. A good flanking move must be made

in an uncontested area. 2. Tactical surprise ought to be an important element of the plan,

and 3. The pursuit is as critical as the attack itself (Ries, 1986). Usually this offensive
strategy is used by a company that does not have overwhelming superiority, but may
have an advantage in one particular area. For example, in the mid 1970's Xerox owned
eighty-eight percent of the plain-paper copier market; however, almost ten years later the
Japanese based Canon Copier took over half of Xerox's market (Kotler 1981). The main
reason Canon took over such a large portion of Xerox's market was by use of the flanking
strategy. Canon focused on the small size copier market that could not afford Xerox's
larger copiers. This attack was successful because it put the attackers strength against the
defenders weakness (Kotler 1981).
There are two types of flanking strategy; Geographical and Segmented flanking
(Kotler, 1985). Geographical flanking occurs when a firm attacks different areas within
the world or country where competitors are nonexistent or not very strong (Kotler, 1985).
The Coca-Cola Company uses this type of marketing strategy. When I interviewed Anna
Whaley, Director of world wide marketing and sales, she said a majority of Coca-Cola's
profits will come from the international areas where competition is not as fierce.
A second type of flanking involves identifying market areas or needs not being
served by competitors within a geographical area (Kotler, 1985). Segmented flanking
potentially can be more powerful than geographical flanking attacks because they satisfy
market needs the competitor has ignored (Kotler, 1985). The Japanese have used
segmented flanking when entering the United States market (Kotler 1985). They brought
products that were different and aimed them at neglected market segments (Kotler, 1985).
These products were smaller or stripped down versions of established products, and they
had more features for the same or lower price (Kotler, 1985). The overall idea of
flanking strategy is to bring a broader coverage of a markets varied needs (Kotler, 1981).
MARKETING WARFARE THROUGH ENCIRCLEMENT
Encirclement is a third type of offensive strategy. When using this type of
strategy a company must have superiority in all areas. Encirclement attacks the
competitor from all sides simultaneously (Kotler, 1981). A ratio of ten to one is needed
to employ this type of strategy (Kotler, 1981). The basic idea of encirclement is to force
the competitor to protect their product from all sides. For example, Smirnoff Vodka used
encirclement strategy when another product was introduced and positioned itself directly
against Smirnoff, but at a lower price (Kotler, 1981). Smirnoff counterattacked by first
raising it's prices, which preserved their quality image. After raising their prices, they
introduced another brand, marketed it at the same price as the competition, and
introduced another brand at a lower price (Kotler, 1981).
There are two types of encirclement strategy: product encirclement and market
encirclement (Kotler, 1985). Product encirclement introduces products with many
different qualities, styles, and features that overwhelm the competition's product line
(Kotler, 1985). Many Japanese firms have encircled U.S. products such as televisions,
radios, hand-held calculators, watches, and stereo equipment (Kotler, 1985). Market
encirclement goes beyond the end user, and focuses on the distribution channels (Kotler,
1985). Seiko is one example of market encirclement. By gaining every available

distribution channel for watches, Seiko took over as much shelf space as possible (Kotler,
1985). There are some risks to be aware of when employing the encirclement strategy.
Having the substantial resources and organizational commitment are two factors needed
before using encirclement strategy. Because it is necessary to have these two
requirements; winning a battle through encirclement takes a great deal of time.
MARKETING WARFARE THROUGH BYPASS
A fourth type of offensive strategy involves the bypass. A bypass attack wins the
battle through attacking areas not defended (Kotler, 1981). When Colgate-Palmolive
tried to enter the nonwoven textiles and health care business, it did not have to fight
Procter and Gamble's strengths because they used the bypass strategy (Kotler, 1981).
There are basically three types of bypass strategy: develop new products,
diversify into unrelated products, and expand into new geographical markets for existing
products (Kotler, 1981). Developing new products is a fairly easily understood bypass
method. Rather than copying the leader, the competitor creates entirely new products
thus gaining a larger market share of untapped customers.
Diversifying into unrelated products is a second type of bypass strategy. Rather
than remaining in a single-industry business the firm will venture out into product lines
that are different from their one single product. Sony has employed this bypass strategy
through entering the restaurant and construction business (Kotler, 1985).
One reason companies may use the bypass strategy is the large amount of
congestion in the competitive battleground (Kotler, 1985). For example, if a company
produces a new product, the company basically moves the new product to a new level
within the same product market area (Kotler, 1985). Moving into digital and electronic
watches may bypass the mechanical watch market; however, the company is still fighting
for a position within the watch industry (Kotler, 1985). Conversely, movement into an
entirely new geographical market usually allows a company to bypass competitors
completely.
GUERILLA MARKETING WARFARE
A final type of offensive warfare is guerilla warfare. Some of the principles that
can be used when determining when to use guerrilla warfare are the following: 1. Find a
segment of the market small enough to defend, 2. No matter how successful you become,
never act like the leader, and 3. Be prepared to bugout at a moment's notice (Ries, 1986).
Guerilla warfare basically involves winning small victories that can over time amount to
a large gain in market share (Kotler, 1981). This attack works because it is very
unconventional which makes it difficult for the defender to counter-attack, and because
they are aimed at small, weak, and unprotected market positions (Kotler, 1981).
One example of guerilla warfare occurred when IBM won a lawsuit against
Hitachi on the grounds that Hitachi stole IBM software. Because IBM won this small
battle, Japanese computer manufacturers had to become defensive by investing large
sums of money into scarce software research and development personnel who had to rewrite old programs and develop new programs which did not interfere with IBM's

intellectual property rights (Kotler, 1981). This type of guerilla warfare pushed Japanese
computer makers back many years.
Guerilla strategy is usually implemented by companies who are smaller in market
position and resource base than the firm they attack. This strategy has usually been used
by the Japanese on U.S. firms which have caused a large drain on the resources used by
the U.S. firms (Kotler, 1985).
DEFENSIVE MARKETING WARFARE
Defensive marketing strategy involves employing those tactics and strategies to
maintain the market share a company has already achieved. There are many ways a
company can maintain it's market share. Some important guidelines in defensive
marketing warfare are: 1. Only the market leader should consider playing defense, 2.
The best defensive strategy is the courage to attack yourself, and 3. Strong competitive
moves should always be blocked (Ries, 1986). Fortification, counter attack, mobile
defense, strategic retreat and position defense are five techniques a company can use in a
defensive strategy.
FORTIFICATION MARKETING WARFARE
First, fortification is based on the concept of the protected fort (Kotler, 1981).
The idea is to have every area of the company or product protected leaving no
weaknesses for the attacker to exploit (Kotler, 1981). One example of market
fortification is within General Foods coffee business. General Foods has entries in
physical, price, and perceptual positions in the marketplace (Kotler, 1981). From
decaffeinated coffees to premium brands, General Foods has complete coverage of the
market. Because of such market domination, other competitors have few unserved or
poorly served markets to attack (Kotler, 1981).
This type of defense can be risky. A pure position defense presumes little change
in the product market or the industry (Kotler, 1985). It is important when using this type
of defense to move the product with the changing technologies and market evolution or
else the product can become outdated or even lose it's marketability.
COUNTERATTACK
Counterattack is a second type of defensive strategy. A counterattack exploits the
competitor's weaknesses where it may involve an attack on a defended terrain (Duro,
1987). This type of defense allows the attacker to move in and the defender capitalizes
on the attackers mistakes (Duro, 1987). One method of counterattack is to aim the
counterattack at the competitors source of cash (Kotler, 1981). There are two ways a
counterattack can succeed: 1. Cutoff the aggressor's cash supply and 2. Through the
counterattack the counterattacker gains because the attacker cannot defend and attack
simultaneously (kotler, 1981).
MARKETING WARFARE THROUGH MOBILE DEFENSE
A third type of marketing warfare involves mobile defense. Mobile defense
occurs when there is a high degree of mobility in the defense which prevents the attacker
from localizing and gaining forces for a battle (Duro, 1987). The basic idea of a mobile

defense is to avoid holding unnecessary ground. One example of mobile defense came in
1977 when the Japanese went beyond the narrow television receiver an produced video
cassette recorders and tapes (Kotler, 1985). The Japanese did not limit their mobile
defense to just products they also used mobile defense in their manufacturing strategy
(Kotler 1985). Rather than keeping the manufacturing plants in Japan they also
broadened their operations to off-shore facilities in Mexico and the Far East (kotler,
1985). Because of their mobility they have found lower labor costs, and new markets
(kotler, 1985).
STRATEGIC RETREAT
Strategic retreat is fourth type of defensive strategy. The best way to describe
strategic retreat is through an example of what Chrysler Corporation did to defend their
company. Chrysler had just been taken over by Lee Iacocca in 1978 went he second oil
price shock hit in the beginning of 1979. With all the problems facing Chrysler, Iacocca
had to use strategic retreat in order to save the company. Iacocca cut his salary from
$360,000 to one dollar, he cut salaries of higher official ten percent, and he cut
stockholdings in all areas. Rather than making deliveries on expensive freight trains, he
turned to deliveries by truck, and used a simple black and white annual report. Iacocca
sold off many of the plants Chrysler could not afford to operate, and within three years
Chrysler had dropped the break even point from $2.3 million to $1.1 million dollars
(Duro, 1987).
MARKETING WARFARE THROUGH POSITION DEFENSE
A fifth and final type of defensive marketing strategy is position defense.
Position defense uses all of a company's resources to consolidate one's position within the
existing market segment (Duro, 1987). This type of defense usually occurs under stiff
competition or major structural changes, i.e. the drop in oil consumption (Duro, 1987).
Basically position defense means staying with the product or service a company knows
best and avoiding the temptation of diversification.
CURRENT MARKETING WARFARE
Some examples of current marketing warfare include the cola wars, the beer wars
and the burger wars. In Al Ries and Jack Trout's book they divide marketing warfare into
four principles. These four principles addressed in Marketing Warfare include: Principles
of flanking marketing warfare, Principles of guerilla marketing warfare, and the
principles of defensive and offensive marketing warfare (Ries, 1986). In the following
sections of this report each of the current marketing warfare battles will be analyzed
through these principles.
MARKETING WARFARE IN THE COLA WARS
First, in the cola wars, Coca-Cola the one-hundred year old softdrink, did not have
any competition until Pepsi came out with the twelve ounce bottle that sold for the same
nickel that bought 6.5 ounces of Coca-Cola (Ries, 1986). Because of the advertising
scheme used by Pepsi, Coca-Cola was on the spot. Coca-Cola had spent $15 million

dollars on advertising and Pepsi just $600,000. The consumer went for quantity rather
than quality (Ries, (1986). If they increased quantity, Coca-Cola was left with a billion
6.5 ounce bottles, and hundreds of thousands of nickel soft drink machines (Ries, 1986).
Pepsi had created a successful flanking attack which turned into an offensive attack
against the heart of Coca-Cola's strength (Ries, 1986). Pepsi had used offensive principle
number two which was: find a weakness in the leader's strength and attack at that point.
A more modern day experience of marketing warfare occurred when Coke introduced
new Coke, one of the biggest marketing blunders of the century. After many years of
being a leader, Coca-Cola did something a leader should never do - change their formula
to match the sweetness of Pepsi Cola (Ries, 1986). Coke had undermined their own
position (Ries, 1986). One key learned from Coca-Cola's mistake was that perception is
reality. Because Coca-Cola had undermined "the real thing" consumers perception was
that nothing could taste better than the "real thing"; thus, Coke threw int the towel and reintroduced Classic Coke (Ries, 1986).
MARKETING WARFARE IN THE BEER WARS
Another example of the current state of marketing warfare is occurring in the
famous beer wars. Consumers are bombarded daily with commercials and
advertisements about who has the best beer. One example of marketing warfare occurred
when imported beer was first introduced into the United States. Heineken was an
imported beer and that was it's strength; however, it was imported from Holland (Ries,
1986). Lowenbreau was the second imported beer and they could have used offensive
principle number three against Heinken. Offensive principle number three states:
Launch the attack on as narrow a front as possible (Ries, 1986). Lowenbrau could have
launched an attack against Heniken. Being from Holland a country famous for
windmills, cheese, and canals, the perception of the market was stronger for Lowenbrau
because it was imported from Germany (Ries, 1986). Today, as marketers, we are
constantly fighting a battle within the consumers mind which is consumer perception.
MARKETING WARFARE IN THE BURGER WARS
Guerilla principle number one: pick a segment of the market that is small enough
to defend (Ries, 1986). This is what McDonald's has done in their attack in the burger
war. Up until the birth of McDonald's there had been coffee shops all across America
famous for different delicacies. Rather than trying to combat each type of delicacy,
McDonald's chose to specialize in the hamburger. Because of their strict standards to
cleanliness, procedures, and continuity, McDonald's has remained the leader of the burger
war from it's start (Ries, 1986).
Eventhough their uniformity was a major strength of McDonald's it was also a
weakness. Burger King, the second fastest growing food chain took on offensive
principle number 2: find a weakness in the leader's strength and attack at that point (Ries,
1986). Burger King did just that, they pinpointed the seam which held McDonald's
strength together and they hit it hard. Burger King focused their advertising on "Have it
your way" (Ries, 1986). McDonald's was squeezed and Burger King's sales increased
with this maneuver (Ries, 1986).

CONCLUSION
In conclusion, Marketing warfare will continue to be an integral part of the
marketing world. Each principle discussed in the above paper will aid a company in
ways it can become more competitive. It is important for companies to employ offensive
and defensive tactics when necessary. Through monitoring competition a company will
know when to use the appropriate warfare techniques to be successful in the marketing
arena.

Cola wars in India

The case explains Cola wars in India and brings out the unique challenges which
multinational corporations face in developing countries.
In 2003, the Indian subsidiary of the Coca-Cola Company was awarded the Robert W.
Woodruff Award for outstanding business performance. Coca-Cola's turnaround in India
had come after a period of heavy investments. During the period 1993-2002, the
company had invested $1 billion in India. In 2003, Coca-Cola had 17 manufacturing
units, 60 distribution centers catering to 5,000 distributors and one million retail outlets,
serviced via trucks and three-wheelers. Coca-Cola directly employed 10,000 people.

The two cola giants, who have been waging a desi marketing war since the time they
stepped into the country, tried to take full advantage of this years Indian weather
conditions. But it is difficult to say who emerged victorious.
The latest tricks from the Pepsi bag were: Grow-Up, an answer to Cokes Thums-Up, and
a second juice brand called Twister. Pepsi was extremely cautious about India because
Coke had announced the fact that it is the market leader in non-carbonated beverages, a
segment growing faster than both the companies core soft drinks market. This is apart
from the cola giants flavoured sodas like Sprite or Mountain Dew.
Pepsi had also challenged Cokes taste-test research, which apparently revealed ThumsUp as a favoured drink among the age group of 12 to 39 years. Pepsi was meticulously
careful in this battle, as Pepsi Indias operations have already threatened to raise
infringement of trademark issues with Coke in the US.
But how could Coke be left behind? It, of course, relied on the successful legwork it had
done in the initial stage. But since over the years the sales have plummeted (dont worry,
along with Pepsis), it started innovative ways of advertising: Coke is putting up ads in

curious places, from public toilets to luggage carousels at airports.

Now both the giants are gearing up for a new battle that is of one-upmanship and,
obviously, better sales.
Lets take a break from the ongoing cola news. How did the carbonated soft drink
industry fall from 71.3 per cent in 1990 to 60.5 per cent last year, when factors like
awareness, lifestyle and population should have ensured huge sales rise? Does that mean
people have suddenly started realising that the (self-created) famous war is just hype and
there is no substance after the initial burp?
Explanations vary, but the basic fact is that people are turning away from fizzy drinks to
healthier bottled waters and bottled teas. Though still only a tiny slice of the soft drinks
market, functional drinks have grown by 62 per cent in volume over the past five years.
No wonder that both the rivals are realising the potential of this segment, and are trying
to tap it as a last survival act.
Nevertheless, it is only in India that the potential of its rich legacy of healthier drinks is
not tapped. We do not have the imagination or the inclination to package and market
them. Instead, we allow global sweet water manufacturers to take advantage of our
palate, which has for centuries savoured buttermilk, neera, nimbupani, ganne ka ras and
so on.
An ongoing drought has threatened groundwater supplies across India, and many
villagers in rural areas are blaming Coca-Cola for aggravating the problem. Coke
operates 52 water-intensive bottling plants in India. In the southern Indian village of
Plachimada in Kerala state, for example, persistent droughts have dried up local wells,
forcing many residents to rely on water supplies trucked in daily by the government.
Some there link the dry wells to the arrival of a Coca-Cola bottling plant in the area three
years ago. Following several large protests, the local government revoked Coca-Colas
license to operate last year, and ordered the company to shut down its $25 million plant.

Similar problems have plagued the company in the rural Indian state of Uttar Pradesh,
where farming is the primary industry. Several thousand residents took part in a 10-day
march in 2004 between two Coca-Cola bottling plants thought to be depleting
groundwater. "Drinking Coke is like drinking farmers blood in India," said protest
organizer Nandlal Master. "Coca-Cola is creating thirst in India, and is directly
responsible for the loss of livelihood and even hunger for thousands of people across
India," added Master, who represents the India Resource Center in the campaign against
Coca-Cola.

Indeed, one report, in the daily newspaper Mathrubhumi, described local women having
to travel five kilometers (three miles) to obtain drinkable water, during which time soft
drinks would come out of the Coca-Cola plant by the truckload.

Water isnt the only issue. The Central Pollution Control Board of India found in 2003
that sludge from the Uttar Pradesh factory was contaminated with high levels of
cadmium, lead and chromium. To make matters worse, Coke was offloading cadmiumladen waste sludge as "free fertilizer" to tribal farmers who live near the plant, prompting
questions as to why they would do that but not provide clean water to local residents
whose underground supplies were being "stolen."

Another Indian nonprofit group, the Centre for Science and Environment (CSE), says it
tested 57 carbonated beverages made by Coca-Cola and Pepsi at 25 bottling plants and
found a "cocktail of between three to five different pesticides in all samples." CSE
Director Sunita Narain, winner of the 2005 Stockholm Water Prize, described the groups
findings as "a grave public health scandal."

For its part, Coca-Cola says that "a small number of politically motivated groups" are
going after the company "for the furtherance of their own anti-multinational agenda." It
denies that its actions in India have contributed to depleting local aquifers, and calls
allegations "without any scientific basis."

It's cola wars of a different kind in India

New Delhi - Every summer witnesses fierce battles in India between two cola
giants - Coca-Cola
and Pepsi - to capture the country's $2 billion soft drinks market. But this year the
rivals have joined
hands to fight not between themselves but with state governments that have
either banned or
mulling similar steps after charges of high pesticide content in them levelled by
an environment
pressure group.
And as the implications the findings of the Centre for Science and Environment's
(CSE) are
percolating among the consumers, the Made-in-India American drinks are going
off the shelves in

educational institutions, government offices and other places as five state

governments have
already banned their sale.
According to the recent CSE study, dangerous levels of pesticide were found in
all the 57 samples
of 11 soft drinks brands collected by the organisation from 25 different
manufacturing units of
Coca-Cola and PepsiCo spread over 12 states.
The study found a cocktail of three-five different pesticides in all the samples - on
an average 24
times higher than norms laid down by government-run Bureau of Indian Standard
(BIS).
'The levels in some samples, for instance, Coca-Cola bought in Kolkata
exceeded the BIS standards
by 140 times for the deadly pesticide Lindane,' said Sunita Narain, director of
CSE.
'Three years after CSE released its findings on pesticide residues in soft drinks,
the new study
shows nothing much has changed. Soft drinks remain unsafe and unhealthy, and
public health
remains severely compromised.'
But the soft drinks multinationals disagree. PepsiCo and Coca-Cola - who are
part of the Indian Soft
Drinks Manufacturers Association - both maintain they follow all the regulations
laid by the Indian
government that are among the most stringent in the world.
PepsiCo says the pesticide residue in various items like eggs, rice, apples, tea
and milk products is
much higher. 'Compared with the permitted levels in tea and other food products,
pesticide levels in
soft drinks are negligible,' a company official said.
'All our products in India are safe and meet all Indian as well as international
standards. We comply
with stringent BIS specifications for packaged drinking water,' said a Coca-Cola
official.
'The BIS standard for pesticide residue is similar to that of in the EU.'
The two cola companies have also issued prominent advertisements in some
national dailies
explaining their positions.
Rajasthan, Madhya Pradesh, Chhattisgarh, Gujarat and Kerala have said the
colas cannot be sold
in schools, colleges and government departments. Karnataka is all set to take a
similar step, while
Jammu and Kashmir has warned people of the harmful effects of these drinks.
Rajasthan Health Minister Digambar Singh even warned if the soft drinks
samples taken for testing
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Copyright 2010 IndiaeNews.com. All Rights Reserved.

show pesticide or toxin content above the permissible levels, 'we will put a
complete ban on their
sale in the state'.
The governments of Bihar, Jharkhand and Assam have sent cola samples for
tests and will act once
the results come in, while Punjab and Haryana - which have also sent samples
for testing - will
follow central government's orders.
In Punjab, samples o
f Coca-Cola, Pepsi, Fanta, 7Up and Mountain Dew have been sent for tests. The
samples were
picked up from Amritsar, Jalandhar, Ludhiana and Hoshiarpur.
West Bengal is yet to take a decision but the state capital's Kolkata Municipal
Corp has asked
educational institutions, hospitals and canteens to discourage the sale of colas.
In the national capital, the state government plans to hold meetings with school
principals. 'A
government circular issued in 2003 asking schools not to serve or sell junk food
including soft drinks
is still in force,' an official told IANS.
Madhya Pradesh was among the first states to ban the colas in the wake of the
CSE findings.
'The ban would be effective in all educational institutions including medical and
technical colleges.
Offenders will be punished under the Food and Civil Supply and Adulteration
Act,' an official of the
state government said.
These developments have had an impact on sales as well but cola companies
were unwilling to
share that information.
Bharat Kumar, owner of an ice cream parlour in Bhopal's New Market area, said
the sales of Pepsi
and Coke had fallen by 80 percent. 'People are shunning the drink,' he told IANS.
In Bihar - where the state government is planning to ban on cola sales in public
places and
educational institutions - directives have been issued to the state's food control
department to collect
samples.
Y.K. Jayswal, a senior food controller, said the soft drinks would be banned in
Bihar if any
hazardous or harmful substance were detected in them.
In nearby Jharkhand, Chief Minister Arjun Munda said: 'Our experts are going
through the CSE
report. If there is a need, we will ban the sale of colas. The health of the people is
our priority.'

In Kerala - which was the latest state to ban the sale of colas - Chief Minister
V.S. Achuthanandan
has asked Coca-Cola and Pepsi to wind up their operations in the state with
immediate effect.
The Karnataka government is contemplating legal action against the
multinational cola firms for
manufacturing and selling soft drinks with high pesticide content that pose health
hazards to
consumers in the state.
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The Jammu and Kashmir government has issued a warning 'alerting the public
not to consume
drinks of Cola giants - Coca-Cola and Pepsi'. The controller of drugs and food
control wing has
advised people to avoid the drinks as they 'contain highly toxic, acidic and
addictive ingredients'.
Although Assam has not imposed any ban, it has launched a drive to check the
bottling plants of
major brands. Other northeastern states too have undertaken similar exercises.
(With inputs from states)
( IANS / India eNews)

The Cola Wars were a campaign of mutually-targeted television advertisements and

marketing campaigns in the 1980s and 1990s between soft drink manufacturers CocaCola Company and PepsiCo Incorporated.
Coca-Cola and Pepsi focused particularly on rock stars; notable soft drink promoters
included KISS, Tina Turner, David Bowie, Rod Stewart, Michael Jackson, Madonna, and
Ray Charles (for Pepsi) and Whitney Houston, Paula Abdul, Weird Al Yankovic, George
Michael, and Elton John (for Coca Cola).
One example of a heated exchange that occurred during the Cola Wars was Coca-Cola
making a strategic retreat on July 11, 1985, by announcing its plans to bring back the
original 'Classic' Coke after recently introducing New Coke.

A Brief History OF PEPSI

Born in the Carolinas in 1898, Pepsi-Cola has a long and rich history. The drink is the invention
of Caleb Bradham (left), a pharmacist and drugstore owner in New Bern, North Carolina.
The information published here is provided by PepsiCo, Inc. and may be
accessed at their site: www.pepsi.com.
The summer of 1898, as usual, was hot and humid in New Bern, North
Carolina. So a young pharmacist named Caleb Bradham began
experimenting with combinations of spices, juices, and syrups trying to
create a refreshing new drink to serve his customers. He succeeded beyond
all expectations because he invented the beverage known around the world
as Pepsi-Cola.

Caleb Bradham knew that to keep people returning to his pharmacy, he would have to turn it into
a gathering place. He did so by concocting his own special beverage, a soft drink. His creation, a
unique mixture of kola nut extract, vanilla and rareoils, became so popular his customers named it
"Brad's Drink." Caleb decided to rename it "Pepsi-Cola," and advertised his new soft drink.
People responded, and sales of Pepsi-Cola started to grow, convincing him that he should form a
company to market the new beverage.
In 1902, he launched the Pepsi-Cola Company in the back room of his pharmacy, and applied to
the U.S. Patent Office for a trademark. At first, he mixed the syrup himself and sold it exclusively
through soda fountains. But soon Caleb recognized that a greater opportunity existed to bottle
Pepsi so that people could drink it anywhere.
The business began to grow, and on June 16, 1903, "Pepsi-Cola" was officially registered with
the U.S. Patent Office. That year, Caleb sold 7,968 gallons of syrup, using the theme line
"Exhilarating, Invigorating, Aids Digestion." He also began awarding franchises to bottle Pepsi to
independent investors, whose number grew from just two in 1905, in the cities of Charlotte and
Durham, North Carolina, to 15 the following year, and 40 by 1907. By the end of 1910, there
were Pepsi-Cola franchises in 24 states.
Pepsi-Cola's first bottling line resulted from some less-than-sophisticated engineering in the back
room of Caleb's pharmacy. Building a strong franchise system was one of Caleb's greatest
achievements. Local Pepsi-Cola bottlers, entrepreneurial in spirit and dedicated to the product's
success, provided a sturdy foundation. They were the cornerstone of the Pepsi-Cola enterprise.
By 1907, the new company was selling more than 100,000 gallons of syrup per year.
Growth was phenomenal, and in 1909 Caleb erected a headquarters so spectacular that the town
of New Bern pictured it on a postcard. Famous racing car driver Barney Oldfield endorsed Pepsi
in newspaper ads as "A bully drink...refreshing, invigorating, a fine bracer before a race."
The previous year, Pepsi had been one of the first companies in the United States to switch from
horse-drawn transport to motor vehicles, and Caleb's business expertise captured widespread
attention. He was even mentioned as a possible candidate for Governor. A 1913 editorial in the
Greensboro Patriot praised him for his "keen and energetic
business sense."
Pepsi-Cola enjoyed 17 unbroken years of success. Caleb now
promoted Pepsi sales with the slogan, "Drink Pepsi-Cola. It will
satisfy you." Then cameWorld War I, and the cost of doing
business increased drastically. Sugar prices see sawed between
record highs and disastrous lows, and so did the price of
producing Pepsi-Cola. Caleb was forced into a series of
business gambles just to survive, until finally, after three
exhausting years, his luck ran out and he was bankrupted. By 1921, only two plants remained
open. It wasn't until a successful candy manufacturer, Charles G. Guth, appeared on the scene that
the future of Pepsi-Cola was assured. Guth was president of Loft Incorporated, a large chain of
candy stores and soda fountains along the eastern seaboard. He saw Pepsi-Cola as an opportunity
to discontinue an unsatisfactory business relationship with the Coca-Cola Company, and at the
same time to add an attractive drawing card to Loft's soda fountains. He was right. After five
owners and 15 unprofitable years, Pepsi-Cola was once again a thriving national brand.

One oddity of the time, for a number of years, all of Pepsi-Cola's sales were actually administered
from a Baltimore building apparently owned by Coca-Cola, and named for its president. Within
two years, Pepsi would earn $1 million for its new owner. With the resurgence came new
confidence, a rarity in those days because the nation was in the early stages of a severe economic
decline that came to be known as the Great
Depression.
1898 Caleb Bradham, a New Bern, North
Carolina, pharmacist, renames "Brad's Drink,"
a carbonated soft drink he created to serve his
drugstore's fountain customers. The new
name, Pepsi-Cola, is derived from two of the
principal ingredients, pepsin and kola nuts. It
is first used on August 28.
1902 Bradham applies to the U.S. Patent
Office for a trademark for the Pepsi-Cola
name.
1903 In keeping with its origin as a pharmacist's concoction, Bradham's advertising praises his
drink as "Exhilarating, invigorating, aids digestion."
1905 A new logo appears, the first change from the original created in 1898.
1906 The logo is redesigned and a new slogan added: "The original pure food drink." The
trademark is registered in Canada.
1907 The Pepsi trademark is registered in Mexico.
1909 Automobile racing pioneer Barney Oldfield becomes Pepsi's first celebrity endorser when
he appears in newspaper ads describing Pepsi-Cola as "A bully drink...refreshing, invigorating, a
fine bracer before a race." The theme "Delicious and Healthful" appears, and will be used
intermittently over the next two decades.
1920 Pepsi appeals to consumers with, "Drink Pepsi-Cola. It will satisfy you."
1932 The trademark is registered in Argentina.
1934 Pepsi begins selling a 12-ounce bottle for five cents, the same price charged by its
competitors for six ounces.
1938 The trademark is registered in the Soviet Union.
1939 A newspaper cartoon strip, "Pepsi & Pete," introduces the theme "Twice as Much for a
Nickel" to increase consumer awareness of Pepsi's value advantage.
1940 Pepsi makes advertising history with the first advertising jingle ever broadcast nationwide.
"Nickel, Nickel" will eventually become a hit record and will be translated into 55 languages. A
new, more modern logo is adopted.

1941 In support of America's war effort, Pepsi changes the color of its bottle crowns to red, white
and blue. A Pepsi canteen in Times Square, New York, operates throughout the war, enabling
more than a million families to record messages for armed services personnel overseas.
1943 The "Twice as Much" advertising strategy expands to include the theme, "Bigger Drink,
Better Taste."
1949 "Why take less when Pepsi's best?" is added to "Twice as Much" advertising.
1950 "More Bounce to the Ounce" becomes Pepsi's new theme as changing soft drink economics
force Pepsi to raise prices to competitive levels. The logo is again updated.
1953 Americans become more weight conscious, and a new strategy based on Pepsi's lower
caloric content is implemented with "The Light Refreshment" campaign.
1954 "The Light Refreshment" evolves to incorporate "Refreshing Without Filling."
1958 Pepsi struggles to enhance its brand image. Sometimes referred to as "the kitchen cola," as a
consequence of its long-time positioning as a bargain brand, Pepsi now identifies itself with
young, fashionable consumers with the "Be Sociable, Have a Pepsi" theme. A distinctive "swirl"
bottle replaces Pepsi's earlier straight-sided bottle.
1959 Soviet Premier Nikita Khrushchev and U.S. Vice-President Richard Nixon meet in the
soon-to-be-famous "kitchen debate" at an international trade fair. The meeting, over Pepsi, is
photo-captioned in the U.S. as "Khrushchev Gets Sociable."
1961 Pepsi further refines its target audience, recognizing the increasing importance of the
younger, post-war generation. "Now it's Pepsi, for Those who think Young" defines youth as a
state of mind as much as a chronological age, maintaining the brand's appeal to all market
segments.
1963 In one of the most significant demographic events in commercial history, the post-war baby
boom emerges as a social and marketplace phenomenon. Pepsi recognizes the change, and
positions Pepsi as the brand belonging to the new generation-The Pepsi Generation. "Come alive!
You're in the Pepsi Generation" makes advertising history. It is the first time a product is
identified, not so much by its attributes, as by its consumers' lifestyles and attitudes.
1964 A new product, Diet Pepsi, is introduced into Pepsi-Cola advertising.
1966 Diet Pepsi's first independent campaign, "Girlwatchers," focuses on the cosmetic benefits of
the low-calorie cola. The "Girlwatchers" musical theme becomes a Top 40 hit. Advertising for
another new product, Mountain Dew, a regional brand acquired in 1964, airs for the first time,
built around the instantly recognizable tag line, "Ya-Hoo, Mountain Dew!"
1967 When research indicates that consumers place a premium on Pepsi's superior taste when
chilled, "Taste that beats the others cold. Pepsi pours it on" emphasizes Pepsi's product
superiority. The campaign, while product-oriented, adheres closely to the energetic, youthful,
lifestyle imagery established in the initial Pepsi Generation campaign.

1969 "You've got a lot to live. Pepsi's got a lot to give" marks a shift in Pepsi Generation
advertising strategy. Youth and lifestyle are still the campaign's driving forces, but with
"Live/Give," a new awareness and a reflection of contemporary events and mood become integral
parts of the advertising's texture.
1973 Pepsi Generation advertising continues to evolve. "Join the Pepsi People, Feelin' Free"
captures the mood of a nation involved in massive social and political change. It pictures us the
way we are-one people, but many personalities.
1975 The Pepsi Challenge, a landmark marketing strategy, convinces millions of consumers that
Pepsi's taste is superior.
1976 "Have a Pepsi Day" is the Pepsi Generation's upbeat reflection of an improving national
mood. "Puppies," a 30-second snapshot of an encounter between a very small boy and some even
smaller dogs, becomes an instant commercial classic.
1979 With the end of the '70s comes the end of a national malaise. Patriotism has been restored
by an exuberant celebration of the U.S. bicentennial, and Americans are looking to the future with
renewed optimism. "Catch that Pepsi Spirit!" catches the mood and the Pepsi Generation carries it
forward into the '80s.
1982 With all the evidence showing that Pepsi's taste is superior, the only question remaining is
how to add that message to Pepsi Generation advertising. The answer? "Pepsi's got your Taste for
Life!," a triumphant celebration of great times and great taste.
1983 The soft drink market grows more competitive, but for Pepsi drinkers, the battle is won. The
time is right and so is their soft drink. It's got to be "Pepsi Now!"
1984 A new generation has emerged-in the United States, around the world and in Pepsi
advertising, too. "Pepsi. The Choice of a New Generation" announces the change, and the most
popular entertainer of the time, Michael Jackson, stars in the first two commercials of the new
campaign. The two spots quickly become "the most eagerly awaited advertising of all time."
1985 Lionel Richie leads a star-studded parade into "New Generation" advertising followed by
pop music icons Tina Turner and Gloria Estefan. Sports heroes Joe Montana and Dan Marino are
part of it, as are film and television stars Teri Garr and Billy Crystal. Geraldine Ferraro, the first
woman nominated to be vice president of the U.S., stars in a Diet Pepsi spot. And the
irrepressible Michael J. Fox brings a special talent, style and spirit to a series of Pepsi and Diet
Pepsi commercials, including a classic, "Apartment 10G."
1987 After an absence of 27 years, Pepsi returns to Times Square, New York,
with a spectacular 850-square foot electronic display billboard declaring Pepsi
to be "America's Choice."
1988 Michael Jackson returns to "New Generation" advertising to star in a fourpart "episodic" commercial named "Chase." "Chase" airs during the Grammy
Awards program and is immediately hailed by the media as "the most-watched
commercial in advertising history."

1989 "The Choice of a New Generation" theme expands to categorize Pepsi users as "A
Generation Ahead!"
1990 Teen stars Fred Savage and Kirk Cameron join the "New Generation" campaign, and
football legend Joe Montana returns in a spot challenging other celebrities to taste test their colas
against Pepsi. Music legend Ray Charles stars in a new Diet Pepsi campaign, "You got the right
one baby."
1991 "You got the Right one Baby" is modified to "You got the Right one Baby, Uh-Huh!" The
"Uh-Huh Girls" join Ray Charles as back-up singers and a campaign soon to become the most
popular advertising in America is on its way. Supermodel Cindy Crawford stars in an awardwinning commercial made to introduce Pepsi's updated logo and package graphics.
1992 Celebrities join consumers, declaring that they "Gotta Have It." The interim campaign
supplants "Choice of a New Generation" as work proceeds on new Pepsi advertising for the '90s.
Mountain Dew growth continues, supported by the antics of an outrageous new Dew Crew whose
claim to fame is that, except for the unique great taste of Dew, they've "Been there, Done that,
Tried that."
1993 "Be Young, Have fun, Drink Pepsi" advertising starring basketball superstar Shaquille
O'Neal is rated as best in U.S.
1994 New advertising introducing Diet Pepsi's freshness dating initiative features Pepsi CEO
Craig Weatherup explaining the relationship between freshness and superior taste to consumers.
1995 In a new campaign, the company declares "Nothing else is a Pepsi" and takes top honors in
the year's national advertising championship.

The pharmacy of Caleb Bradham, with a Pepsi dispenser, as portrayed in a New Bern
exhibition in the Historical Museum of Bern.
Pepsi was first introduced as "Brad's Drink" in New Bern, North Carolina, in 1883 by
Caleb Bradham, who made it at his pharmacy where the drink was sold. It was later
named Pepsi Cola, possibly due to the digestive enzyme pepsin and kola nuts used in the

recipe. Bradham sought to create a fountain drink that was delicious and would aid in
digestion and boost energy.
In 1903, Bradham moved the bottling of Pepsi-Cola from his drugstore to a rented
warehouse. That year, Bradham sold 7,968 gallons of syrup. The next year, Pepsi was
sold in six-ounce bottles, and sales increased to 19,848 gallons. In 1909, automobile race
pioneer Barney Oldfield was the first celebrity to endorse Pepsi-Cola, describing it as "A
bully drink...refreshing, invigorating, a fine bracer before a race." The advertising theme
"Delicious and Healthful" was then used over the next two decades.In 1926, Pepsi
received its first logo redesign since the original design of 1905. In 1929, the logo was
changed again.
In 1931, at the depth of the Great Depression, the Pepsi-Cola Company entered
bankruptcy - in large part due to financial losses incurred by speculating on wildly
fluctuating sugar prices as a result of World War I. Assets were sold and Roy C.
Megargel bought the Pepsi trademark.[4] Eight years later, the company went bankrupt
again. Pepsi's assets were then purchased by Charles Guth, the President of Loft Inc. Loft
was a candy manufacturer with retail stores that contained soda fountains. He sought to
replace Coca-Cola at his stores' fountains after Coke refused to give him a discount on
syrup. Guth then had Loft's chemists reformulate the Pepsi-Cola syrup formula.
On three separate occasions between 1922 and 1933, the Coca-Cola Company was
offered the opportunity to purchase the Pepsi-Cola company and it declined on each
occasion.

Pepsi-Cola trademark

The original stylized Pepsi-Cola logo

The second stylized Pepsi-Cola logo

The original trademark application for Pepsi-Cola was filed on September 23, 1902 with
registration approved on June 16, 1903. In the application's statement, Caleb Bradham
describes the trademark as an, "arbitrary hyphenated word "PEPSI-COLA," and indicated
that the mark was in continuous use for his business since August 1, 1901. The PepsiCola's description is a flavoring-syrup for soda water. The trademark expired on April 15,
1994.
A second Pepsi-Cola trademark is on record with the USPTO. The application date
submitted by Caleb Bradham for the second trademark is Saturday, April 15, 1905 with
the successful registration date of April 15, 1906, over three years after the original date.

Curiously, in this application, Caleb Bradham states that the trademark had been
continuously used in his business "and those from whom title is derived since in the 1905
application the description submitted to the USPTO was for a tonic beverage. The federal
status for the 1905 trademark is registered and renewed and is owned by Pepsico, Inc. of
Purchase, New York.

Rise
During the Great Depression, Pepsi gained popularity following the introduction in 1936
of a 12-ounce bottle. Initially priced at 10 cents, sales were slow, but when the price was
slashed to five cents, sales increased substantially. With a radio advertising campaign
featuring the jingle "Pepsi-Cola hits the spot / Twelve full ounces, that's a lot / Twice as
much for a nickel, too / Pepsi-Cola is the drink for you," arranged in such a way that the
jingle never ends. Pepsi encouraged price-watching consumers to switch, obliquely
referring to the Coca-Cola standard of six ounces per bottle for the price of five cents (a
nickel), instead of the 12 ounces Pepsi sold at the same price. Coming at a time of
economic crisis, the campaign succeeded in boosting Pepsi's status. From 1936 to 1938,
Pepsi-Cola's profits doubled.
Pepsi's success under Guth came while the Loft Candy business was faltering. Since he
had initially used Loft's finances and facilities to establish the new Pepsi success, the
near-bankrupt Loft Company sued Guth for possession of the Pepsi-Cola company. A
long legal battle, Guth v. Loft, then ensued, with the case reaching the Delaware Supreme
Court and ultimately ending in a loss for Guth.

Niche marketing

1940s advertisement specifically targeting African Americans

Walter Mack was named the new President of Pepsi-Cola and guided the company
through the 1940s. Mack, who supported progressive causes, noticed that the company's
strategy of using advertising for a general audience either ignored African Americans or
used ethnic stereotypes in portraying blacks. He realized African Americans were an
untapped niche market and that Pepsi stood to gain market share by targeting its
advertising directly towards them. To this end, he hired Hennan Smith, an advertising
executive "from the Negro newspaper field"to lead an all-black sales team, which had to
be cut due to the onset of World War II. In 1947, Mack resumed his efforts, hiring
Edward F. Boyd to lead a twelve-man team. They came up with advertising portraying
black Americans in a positive light, such as one with a smiling mother holding a six pack
of Pepsi while her son (a young Ron Brown, who grew up to be Secretary of Commerce)
reaches up for one. Another ad campaign, titled "Leaders in Their Fields", profiled
twenty prominent African Americans such as Nobel Peace Prize winner Ralph Bunche
and photographer Gordon Parks.
Boyd also led a sales team composed entirely of blacks around the country to promote
Pepsi. Racial segregation and Jim Crow laws were still in place throughout much of the
U.S.; Boyd's team faced a great deal of discrimination as a result, from insults by Pepsi
co-workers to threats by the Ku Klux Klan. On the other hand, they were able to use
racism as a selling point, attacking Coke's reluctance to hire blacks and support by the
chairman of Coke for segregationist Governor of Georgia Herman Talmadge. As a result,
Pepsi's market share as compared to Coke's shot up dramatically. After the sales team
visited Chicago, Pepsi's share in the city overtook that of Coke for the first time.
This focus on the market for black people caused some consternation within the company
and among its affiliates. They did not want to seem focused on black customers for fear
white customers would be pushed away. In a meeting at the Waldorf-Astoria Hotel, Mack
tried to assuage the 500 bottlers in attendance by pandering to them, saying, "We don't
want it to become known as a nigger drink." After Mack left the company in 1950,
support for the black sales team faded and it was cut.

Marketing

Pepsi logo (1970-87). In 1987, the font was modified slightly to a more rounded version
which was used until 1991. This logo was used for Pepsi Throwback in 2010.

Pepsi logo (2003-2008). Pepsi Wild Cherry and Pepsi ONE continued to use this design
through March 2010. It was outside of the U.S. until 2010. The original version had the
Pepsi wording on the top left of the Pepsi Globe. In 2007, the Pepsi wording was moved
to the bottom of the globe.

Photo of a Pepsi can with the current logo and labeling (2008 - present.)

Pepsi bottle in Mexico. This logo was still in use in Mexico and most countries through
early 2010. This Pepsi logo was last used in Canada in May 2009.

From the 1930s through the late 1950s, "Pepsi-Cola Hits The Spot" was the most
commonly used slogan in the days of old radio, classic motion pictures, and later
television. Its jingle (conceived in the days when Pepsi cost only five cents) was used in
many different forms with different lyrics.
With the rise of television, Pepsi utilized the services of a young, up-and-coming actress
named Polly Bergen to promote products, oftentimes lending her singing talents to the
classic "...Hits The Spot" jingle. Some of these Bergen spots can be seen on
ClassicTVAds.com.
Through the intervening decades, there have been many different Pepsi theme songs sung
on television by a variety of artists, from Joanie Summers to The Jacksons to Britney
Spears. (See Slogans)
In 1975, Pepsi introduced the Pepsi Challenge marketing campaign where PepsiCo set up
a blind tasting between Pepsi-Cola and rival Coca-Cola. During these blind taste tests the
majority of participants picked Pepsi as the better tasting of the two soft drinks. PepsiCo
took great advantage of the campaign with television commercials reporting the results to
the public.
In 1976 Pepsi, RKO Bottlers in Toledo, Ohio hired the first female Pepsi salesperson,
Denise Muck, to coincide with the United States bicentennial celebration.
In 1997, PepsiCo launched the highly successful Pepsi Stuff marketing strategy. By 2002,
the strategy was cited by Promo Magazine as one of 16 "Ageless Wonders" that "helped
redefine promotion marketing."
In 2007, PepsiCo redesigned their cans for the fourteenth time, and for the first time,
included more than thirty different backgrounds on each can, introducing a new
background every three weeks. One of their background designs includes a string of
repetitive numbers, "73774". This is a numerical expression from a telephone keypad of
the word "Pepsi."
In late 2008, Pepsi overhauled their entire brand, simultaneously introducing a new logo
and a minimalist label design. The redesign was comparable to Coca-Cola's earlier
simplification of their can and bottle designs. Also in 2008 Pepsi teamed up with
Google/YouTube to produce the first daily entertainment show on Youtube, Poptub. This
daily show deals with pop culture, internet viral videos, and celebrity gossip. Poptub is
updated daily from Pepsi.
In 2009, "Bring Home the Cup," changed to "Team Up and Bring Home the Cup." The
new installment of the campaign asks for team involvement and an advocate to submit
content on behalf of their team for the chance to have the Stanley Cup delivered to the
team's hometown by Mark Messier.

Pepsi has official sponsorship deals with three of the four major North American
professional sports leagues: the National Football League, National Hockey League and
Major League Baseball. Pepsi also sponsors Major League Soccer.
Pepsi also has sponsorship deals in international cricket teams. The Pakistan cricket team
is one of the teams that the brand sponsors. The team wears the Pepsi logo on the front of
their test and ODI test match clothing.
On July 6, 2009, Pepsi announced it would make a $1 billion investment in Russia over
three years, bringing the total Pepsi investment in the country to $4 billion.
In July 2009, Pepsi started marketing itself as Pecsi in Argentina in response to its name
being mispronounced by 25% of the population and as a way to connect more with all of
the population.
In October 2008, Pepsi announced that it would be redesigning its logo and re-branding
many of its products by early 2009. In 2009, Pepsi, Diet Pepsi and Pepsi Max began
using all lower-case fonts for name brands, and Diet Pepsi Max was re-branded as Pepsi
Max. The brand's blue and red globe trademark became a series of "smiles," with the
central white band arcing at different angles depending on the product until 2010. Pepsi
released this logo in U.S. in late 2008, and later it was released in 2009 in Canada (the
first country outside of the United States for Pepsi's new logo), Brazil, Bolivia,
Guatemala, Nicaragua, Honduras, El Salvador, Colombia, Argentina, Puerto Rico, Costa
Rica, Panama, Chile, Dominican Republic, the Philippines and Australia; in the rest of
the world the new logo has been released in 2010, meaning the old logo has been phased
out entirely (most recently, France and Mexico switched to Pepsi's current logo). The UK
started to use the new Pepsi logo on cans in an order different from the US can. In mid2010, all Pepsi variants, regular, diet, and Pepsi Max, have started using only the
medium-sized "smile" Pepsi Globe.
Pepsi and Pepsi Max cans and bottles in Australia now carry the localized version of the
new Pepsi Logo. The word Pepsi and the logo are in the new style, while the word "Max"
is still in the previous style. Pepsi Wild Cherry finally received the 2008 Pepsi design in
March 2010.

Rivalry with Coca-Cola

Main article: Cola Wars
According to Consumer Reports, in the 1970s, the rivalry continued to heat up the
market. Pepsi conducted blind taste tests in stores, in what was called the "Pepsi
Challenge". These tests suggested that more consumers preferred the taste of Pepsi
(which is believed to have more lemon oil, less orange oil, and uses vanillin rather than
vanilla) to Coke. The sales of Pepsi started to climb, and Pepsi kicked off the "Challenge"
across the nation. This became known as the "Cola Wars".

In 1985, The Coca-Cola Company, amid much publicity, changed its formula. The theory
has been advanced that New Coke, as the reformulated drink came to be known, was
invented specifically in response to the Pepsi Challenge. However, a consumer backlash
led to Coca-Cola quickly reintroducing the original formula as Coke "Classic".
According to Beverage Digest's 2008 report on carbonated soft drinks, PepsiCo's U.S.
market share is 30.8 percent, while The Coca-Cola Company's is 42.7 percent.[17] CocaCola outsells Pepsi in most parts of the U.S., notable exceptions being central
Appalachia, North Dakota, and Utah. In the city of Buffalo, New York, Pepsi outsells
Coca-Cola by a two-to-one margin.[18]
Overall, Coca-Cola continues to outsell Pepsi in almost all areas of the world. However,
exceptions include India; Saudi Arabia; Pakistan (Pepsi has been a dominant sponsor of
the Pakistan cricket team since the 1990s); the Dominican Republic; Guatemala the
Canadian provinces of Quebec, Newfoundland and Labrador, Nova Scotia, and Prince
Edward Island; and Northern Ontario.[19]
Pepsi had long been the drink of Canadian Francophones and it continues to hold its
dominance by relying on local Qubcois celebrities (especially Claude Meunier, of La
Petite Vie fame) to sell its product.[20] PepsiCo use the slogan "here, it's Pepsi" (Ici, c'est
Pepsi) to answer to Coca-cola publicity "Everywhere in the world, it's Coke" (Partout
dans le monde, c'est Coke).
By most accounts, Coca-Cola was India's leading soft drink until 1977 when it left India
after a new government ordered The Coca-Cola Company to turn over its secret formula
for Coke and dilute its stake in its Indian unit as required by the Foreign Exchange
Regulation Act (FERA). In 1988, PepsiCo gained entry to India by creating a joint
venture with the Punjab government-owned Punjab Agro Industrial Corporation (PAIC)
and Voltas India Limited. This joint venture marketed and sold Lehar Pepsi until 1991
when the use of foreign brands was allowed; PepsiCo bought out its partners and ended
the joint venture in 1994. In 1993, The Coca-Cola Company returned in pursuance of
India's Liberalization policy.[21] In 2005, The Coca-Cola Company and PepsiCo together
held 95% market share of soft-drink sales in India. Coca-Cola India's market share was
52.5%.[22]
In Russia, Pepsi initially had a larger market share than Coke but it was undercut once the
Cold War ended. In 1972, PepsiCo company struck a barter agreement with the then
government of the Soviet Union, in which PepsiCo was granted exportation and Western
marketing rights to Stolichnaya vodka in exchange for importation and Soviet marketing
of Pepsi-Cola.[23] [24] This exchange led to Pepsi-Cola being the first foreign product
sanctioned for sale in the U.S.S.R.[25]
Reminiscent of the way that Coca-Cola became a cultural icon and its global spread
spawned words like "coca colonization", Pepsi-Cola and its relation to the Soviet system
turned it into an icon. In the early 1990s, the term "Pepsi-stroika" began appearing as a
pun on "perestroika", the reform policy of the Soviet Union under Mikhail Gorbachev.

Critics viewed the policy as a lot of fizz without substance and as an attempt to usher in
Western products in deals there with the old elites. Pepsi, as one of the first American
products in the Soviet Union, became a symbol of that relationship and the Soviet policy.
This was reflected in Russian author Victor Pelevin's book "Generation P".
In 1989, Billy Joel mentioned the rivalry between the two companies in the song "We
Didn't Start The Fire". The line "Rock & Roll and Cola Wars" refers to Pepsi and Coke's
usage of various musicians in their advertising campaigns. Coke used Paula Abdul, while
Pepsi used Michael Jackson. They then continued to try to get other musicians to
advertise their beverages.
In 1992, following the Soviet collapse, Coca-Cola was introduced to the Russian market.
As it came to be associated with the new system, and Pepsi to the old, Coca-Cola rapidly
captured a significant market share that might otherwise have required years to achieve.
By July 2005, Coca-Cola enjoyed a market share of 19.4 percent, followed by Pepsi with
13 percent.[27]
Pepsi did not sell soft drinks in Israel until 1991. Many Israelis and some American
Jewish organizations attributed Pepsi's previous reluctance to do battle to the Arab
boycott. Pepsi, which has a large and lucrative business in the Arab world, denied that,
saying that economic, rather than political, reasons kept it out of Israel.[28]

Slogans

Old Pepsi can with "rounded" logo version (1987-1991).

Old logo still in use in Pepsi cans made in Pakistan.

A large advertisement made to resemble a Pepsi cup at Nickelodeon Universe in the Mall
of America.

19391950: "Twice as Much for a Nickel"

1950: "More Bounce to the Ounce"
19501957: "Any Weather is Pepsi Weather"
19571958: "Say Pepsi, Please"
19581961: "Be Sociable, Have a Pepsi"
1961-1963: "Now It's Pepsi for Those Who Think Young" (jingle sung by Joanie
Sommers)
19631967: "Come Alive, You're in the Pepsi Generation" (jingle sung by Joanie
Sommers)

19671969: "(Taste that beats the others cold) Pepsi Pours It On".
19691975: "You've Got a Lot to Live, and Pepsi's Got a Lot to Give"
19751977: "Have a Pepsi Day"
19771980: "Join the Pepsi People (Feeling Free)"
19801981: "Catch That Pepsi Spirit" (David Lucas, composer)
19811983: "Pepsi's got your taste for life"
1983: "It's cheaper than Coke!"
19831984: "Pepsi Now! Take the Challenge!"
19841991: "Pepsi. The Choice of a New Generation" (commercial with Michael
Jackson and The Jacksons, featuring Pepsi version of Billie Jean)
1984-1988: "Diet Pepsi. The Choice of a New Generation"
1988-1989: "Diet Pepsi. The Taste That's Generations Ahead"
1989-1990: "Diet Pepsi. The Right One"
1989-1992: "Diet Pepsi. The Taste That Beats Diet Coke"
19861987: "We've Got The Taste" (commercial with Tina Turner)
19871990: "Pepsi's Cool" (commercial with Michael Jackson, featuring Pepsi
version of Bad)
19901991: "You got the right one Baby UH HUH" (sung by Ray Charles for
Diet Pepsi)
19901991: "Yehi hai right choice Baby UH HUH" (Hindi - meaning "This is the
right choice Baby UH HUH") (India)
19911992: "Gotta Have It"/"Chill Out"
19921993: "Be Young, Have Fun, Drink Pepsi"
19931994: "Right Now" (Van Halen song for the Crystal Pepsi advertisement)
19941995: "Double Dutch Bus" (Pepsi song sung by Brad Bentz)
1995: "Nothing Else is a Pepsi"
19951996: "Drink Pepsi. Get Stuff." Pepsi Stuff campaign
19961997: "Pepsi: There's nothing official about it" (During the Wills World
Cup (cricket) held in India/Pakistan/Sri Lanka)
19971998: "Generation Next" (with the Spice Girls)
19981999: "It's the cola" (100th anniversary commercial)
19992000: "For Those Who Think Young"/"The Joy of Pepsi-Cola"
(commercial with Britney Spears/commercial with Mary J. Blige)
1999-2006: "Yeh dil maange more" (Hindi - meaning "This heart asks for more")
(India)
2003: "It's the Cola"/"Dare for More" (Pepsi Commercial)
20062007: "Why You Doggin' Me"/"Taste the one that's forever young" (Mary
J. Blige)
20072008: "More Happy"/"Taste the once that's forever young" (Michael
Alexander)
2008present: "pepsi ye pyaas heh bari" ((urdu) meaning "it killed my thirst"
(pakistan))
2008: "Pepsi Stuff" Super Bowl Commercial (Justin Timberlake)
2008: "epsi is #1" v commercial (Luke Rosin)

2008present: "Something For Everyone"

2009present: "Refresh Everything"/"Every Generation Refreshes the World"
2009present: "Yeh hai youngistaan meri jaan" (Hindi - meaning "This is our
young country my baby")
2009present: "My Pepsi My Way"(India)
2009present: "Refresca tu Mundo" (Spanish - meaning "Refresh your world")
(Spanish Spoken countries in Latin America)
2010present: "Every Pepsi Refreshes The World"
2010present "Pepsi. Sarap Magbago." (Philippines - meaning "It's nice to
change")
2010present "Badal Do Zamana" (Urdu - meaning "Change The World")
(Pakistan)

Pepsiman
Pepsiman is an official Pepsi mascot from Pepsi's Japanese corporate branch. The design
of the Pepsiman character is attributed to Canadian comic book artist Travis Charest,
created sometime around the mid 1990s. Pepsiman took on three different outfits, each
one representing the current style of the Pepsi can in distribution. Twelve commercials
were created featuring the character. His role in the advertisements is to appear with
Pepsi to thirsty people or people craving soda. Pepsiman happens to appear at just the
right time with the product. After delivering the beverage, sometimes Pepsiman would
encounter a difficult and action oriented situation which would result in injury.
In 1996, Sega-AM2 released the Sega Saturn version of their arcade fighting game
Fighting Vipers. In this game Pepsiman was included as a special character, with his
specialty listed as being the ability to "quench one's thirst". He does not appear in any
other version or sequel. In 1999, KID developed a video game for the PlayStation entitled
Pepsiman. As Pepsiman, the player runs, skateboards, rolls, and stumbles through
various areas, avoiding dangers and collecting cans of Pepsi all while trying to reach a
thirsty person as in the commercials.

Variants
Main article: List of Pepsi variations

Ingredients
In the United States, Pepsi is made with carbonated water, high fructose corn syrup,
caramel color, sugar, Phosphoric acid, caffeine, citric acid and natural flavors. A can of
Pepsi (12 fl ounces) has 41 grams of carbohydrates (all from sugar), 30 mg of sodium,
0 grams of fat, 0 grams of protein, 38 mg of caffeine and 150 calories.[29][30] The caffeinefree Pepsi-Cola contains the same ingredients but without the caffeine.

The original Pepsi-Cola recipe was available from documents filed with the court at the
time that the Pepsi-Cola Company went bankrupt in 1929. The original formula
contained neither cola nor caffeine.[citation needed]

COCA COLA HISTORY

Coca-Cola is a carbonated soft drink sold in the stores, restaurants, and vending
machines of more than 200 countries.[1] It is produced by The Coca-Cola Company of
Atlanta, Georgia, and is often referred to simply as Coke (a registered trademark of The
Coca-Cola Company in the United States since March 27, 1944). Originally intended as a
patent medicine when it was invented in the late 19th century by John Pemberton, Coca-

Cola was bought out by businessman Asa Griggs Candler, whose marketing tactics led
Coke to its dominance of the world soft-drink market throughout the 20th century.
The company produces concentrate, which is then sold to licensed Coca-Cola bottlers
throughout the world. The bottlers, who hold territorially exclusive contracts with the
company, produce finished product in cans and bottles from the concentrate in
combination with filtered water and sweeteners. The bottlers then sell, distribute and
merchandise Coca-Cola to retail stores and vending machines. Such bottlers include
Coca-Cola Enterprises, which is the largest single Coca-Cola bottler in North America
and western Europe. The Coca-Cola Company also sells concentrate for soda fountains to
major restaurants and food service distributors.
The Coca-Cola Company has, on occasion, introduced other cola drinks under the Coke
brand name. The most common of these is Diet Coke, with others including CaffeineFree Coca-Cola, Diet Coke Caffeine-Free, Coca-Cola Cherry, Coca-Cola Zero, CocaCola Vanilla, and special editions with lemon, lime or coffee.
In response to consumer insistence on a more natural product, the company is in the
process of phasing out E211, or sodium benzoate, the controversial additive used in Diet
Coke and linked to DNA damage in yeast cells and hyperactivity in children. The
company has stated that it plans to remove E211 from its other products, including Sprite
and Oasis, as soon as a satisfactory alternative is found.[2]

The prototype Coca-Cola recipe was formulated at the Eagle Drug and Chemical
Company, a drugstore in Columbus, Georgia by John Pemberton, originally as a coca
wine called Pemberton's French Wine Coca.[3][4] He may have been inspired by the
formidable success of Vin Mariani, a European coca wine.[5]
In 1886, when Atlanta and Fulton County passed prohibition legislation, Pemberton
responded by developing Coca-Cola, essentially a non-alcoholic version of French Wine
Coca.[6] The first sales were at Jacob's Pharmacy in Atlanta, Georgia, on May 8, 1886.[7] It
was initially sold as a patent medicine for five cents[8] a glass at soda fountains, which
were popular in the United States at the time due to the belief that carbonated water was
good for the health.[9] Pemberton claimed Coca-Cola cured many diseases, including
morphine addiction, dyspepsia, neurasthenia, headache, and impotence. Pemberton ran
the first advertisement for the beverage on May 29 of the same year in the Atlanta
Journal.[10]
By 1888, three versions of Coca-Cola sold by three separate businesses were on the
market. Asa Griggs Candler acquired a stake in Pemberton's company in 1887 and
incorporated it as the Coca Cola Company in 1888.[11] The same year, while suffering
from an ongoing addiction to morphine,[12] Pemberton sold the rights a second time to
four more businessmen: J.C. Mayfield, A.O. Murphey, C.O. Mullahy and E.H.

Bloodworth. Meanwhile, Pemberton's alcoholic[13] son Charley Pemberton began selling

his own version of the product.[14]
John Pemberton declared that the name "Coca-Cola" belonged to Charley, but the other
two manufacturers could continue to use the formula. So, in the summer of 1888, Candler
sold his beverage under the names Yum Yum and Koke. After both failed to catch on,
Candler set out to establish a legal claim to Coca-Cola in late 1888, in order to force his
two competitors out of the business. Candler purchased exclusive rights to the formula
from John Pemberton, Margaret Dozier and Woolfolk Walker. However, in 1914, Dozier
came forward to claim her signature on the bill of sale had been forged, and subsequent
analysis has indicated John Pemberton's signature was most likely a forgery as well.[15]

Old German Coca-Cola bottle opener

In 1892 Candler incorporated a second company, The Coca-Cola Company (the current
corporation), and in 1910 Candler had the earliest records of the company burned, further
obscuring its legal origins. By the time of its 50th anniversary, the drink had reached the
status of a national icon in the USA. In 1935, it was certified kosher by Rabbi Tobias
Geffen, after the company made minor changes in the sourcing of some ingredients.[16]
Coca-Cola was sold in bottles for the first time on March 12, 1894. The first outdoor wall
advertisement was painted in the same year as well in Cartersville, Georgia.[17] Cans of
Coke first appeared in 1955.[18] The first bottling of Coca-Cola occurred in Vicksburg,
Mississippi, at the Biedenharn Candy Company in 1891. Its proprietor was Joseph A.
Biedenharn. The original bottles were Biedenharn bottles, very different from the much
later hobble-skirt design that is now so familiar. Asa Candler was tentative about bottling
the drink, but two entrepreneurs from Chattanooga, Tennessee, Benjamin F. Thomas and
Joseph B. Whitehead, proposed the idea and were so persuasive that Candler signed a
contract giving them control of the procedure for only one dollar. Candler never collected
his dollar, but in 1899 Chattanooga became the site of the first Coca-Cola bottling
company.[19] The loosely termed contract proved to be problematic for the company for
decades to come. Legal matters were not helped by the decision of the bottlers to
subcontract to other companies, effectively becoming parent bottlers.[20]
Coke concentrate, or Coke syrup, was and is sold separately at pharmacies in small
quantities, as an over-the-counter remedy for nausea or mildly upset stomach.

New Coke

Main article: New Coke

Coca-Cola sign in Colorado City, Texas

On April 23, 1985, Coca-Cola, amid much publicity, attempted to change the formula of
the drink with "New Coke". Follow-up taste tests revealed that most consumers preferred
the taste of New Coke to both Coke and Pepsi, but Coca-Cola management was
unprepared for the public's nostalgia for the old drink, leading to a backlash. The
company gave in to protests and returned to a variation of the old formula, under the
name Coca-Cola Classic on July 10, 1985.

21st Century
On February 7, 2005, the Coca-Cola Company announced that in the second quarter of
2005 they planned to launch a Diet Coke product sweetened with the artificial sweetener
sucralose, the same sweetener currently used in Pepsi One.[21][22] On March 21, 2005, it
announced another diet product, Coca-Cola Zero, sweetened partly with a blend of
aspartame and acesulfame potassium.[23] In 2007, Coca-Cola began to sell a new "healthy
soda": Diet Coke with vitamins B6, B12, magnesium, niacin, and zinc, marketed as "Diet
Coke Plus."
On July 5, 2005, it was revealed that Coca-Cola would resume operations in Iraq for the
first time since the Arab League boycotted the company in 1968.[24]
In April 2007, in Canada, the name "Coca-Cola Classic" was changed back to "CocaCola." The word "Classic" was truncated because "New Coke" was no longer in
production, eliminating the need to differentiate between the two.[25] The formula
remained unchanged.
In January 2009, Coca-Cola stopped printing the word "Classic" on the labels of 16ounce bottles sold in parts of the southeastern United States.[26] The change is part of a
larger strategy to rejuvenate the product's image.[26]
In November 2009, due to a dispute over wholesale prices of Coca-Cola products, Costco
stopped restocking its shelves with Coke and Diet Coke.[27]

Use of stimulants in formula

When launched Coca-Cola's two key ingredients were cocaine (benzoylmethyl ecgonine)
and caffeine. The cocaine was derived from the coca leaf and the caffeine from kola nut,
leading to the name Coca-Cola (the "K" in Kola was replaced with a "C" for marketing
purposes).[28][29]

Coca cocaine
Pemberton called for five ounces of coca leaf per gallon of syrup, a significant dose; in
1891, Candler claimed his formula (altered extensively from Pemberton's original)
contained only a tenth of this amount. Coca-Cola did once contain an estimated nine
milligrams of cocaine per glass, but in 1903 it was removed.[30] Coca-Cola still contains
coca flavoring.
After 1904, instead of using fresh leaves, Coca-Cola started using "spent" leaves the
leftovers of the cocaine-extraction process with cocaine trace levels left over at a
molecular level.[31] To this day, Coca-Cola uses as an ingredient a cocaine-free coca leaf
extract prepared at a Stepan Company plant in Maywood, New Jersey.
In the United States, Stepan Company is the only manufacturing plant authorized by the
Federal Government to import and process the coca plant,[32] which it obtains mainly
from Peru and, to a lesser extent, Bolivia. Besides producing the coca flavoring agent for
Coca-Cola, Stepan Company extracts cocaine from the coca leaves, which it sells to
Mallinckrodt, a St. Louis, Missouri pharmaceutical manufacturer that is the only
company in the United States licensed to purify cocaine for medicinal use.[33]

Kola nuts caffeine

Kola nuts act as a flavoring and the source of caffeine in Coca-Cola. In Britain, for
example, the ingredient label states "Flavourings (Including Caffeine)."[34] Kola nuts
contain about 2 percent to 3.5 percent caffeine, are of bitter flavor and are commonly
used in cola soft drinks. In 1911, the U.S. government initiated United States v. Forty
Barrels and Twenty Kegs of Coca-Cola, hoping to force Coca-Cola to remove caffeine
from its formula. The case was decided in favor of Coca-Cola. Subsequently, in 1912 the
U.S. Pure Food and Drug Act was amended, adding caffeine to the list of "habit-forming"
and "deleterious" substances which must be listed on a product's label.
Coca-Cola contains 46 mg of caffeine per 12 fluid ounces, while Caffeine-Free CocaCola and Diet Coke Caffeine-Free contain 0 mg.[35]

Production

Coca-Cola 375 mL 24 can pack (AU)

Ingredients

Carbonated water
Sugar (sucrose or high-fructose corn syrup depending on country of origin)
Caffeine
Phosphoric acid v. Caramel (E150d)
Natural flavorings[36]

A can of Coke (12 fl ounces/355 ml) has 39 grams of carbohydrates (all from sugar,
approximately 10 teaspoons),[37] 50 mg of sodium, 0 grams fat, 0 grams potassium, and
140 calories.[38]

Formula of natural flavorings

Main article: Coca-Cola formula
The exact formula of Coca-Cola's natural flavourings (but not its other ingredients which
are listed on the side of the bottle or can) is a trade secret. The original copy of the
formula is held in SunTrust Bank's main vault in Atlanta. Its predecessor, the Trust
Company, was the underwriter for the Coca-Cola Company's initial public offering in
1919. A popular myth states that only two executives have access to the formula, with
each executive having only half the formula.[39] The truth is that while Coca-Cola does
have a rule restricting access to only two executives, each knows the entire formula and
others, in addition to the prescribed duo, have known the formulation process.[40]

Franchised production model

The actual production and distribution of Coca-Cola follows a franchising model. The
Coca-Cola Company only produces a syrup concentrate, which it sells to bottlers
throughout the world, who hold Coca-Cola franchises for one or more geographical areas.
The bottlers produce the final drink by mixing the syrup with filtered water and
sweeteners, and then carbonate it before putting it in cans and bottles, which the bottlers
then sell and distribute to retail stores, vending machines, restaurants and food service
distributors.[41]
The Coca-Cola Company owns minority shares in some of its largest franchises, like
Coca-Cola Enterprises, Coca-Cola Amatil, Coca-Cola Hellenic Bottling Company
(CCHBC) and Coca-Cola FEMSA, but fully independent bottlers produce almost half of
the volume sold in the world. Independent bottlers are allowed to sweeten the drink
according to local tastes.[42]
The bottling plant in Skopje, Macedonia, received the 2009 award for "Best Bottling
Company".[43]

Brand portfolio
Name

Launched Discontinued

Notes

Coca-Cola

1886

The original version of Coca-Cola.

Caffeine-Free
Coca-Cola

1983

The caffeine free version of CocaCola.

Coca-Cola
Cherry

1985

Was available in Canada starting in

1996. Called "Cherry Coca-Cola
(Cherry Coke)" in North America
until 2006. Zero-calorie variant
(Coca-Cola Cherry Zero) also

Picture

currently available.
New
Coke/"CocaCola II"

1985

2002

Still available in Yap and American

Samoa
Still available in:

Coca-Cola
with Lemon

Coca-Cola
Vanilla

2001

2002

2005

2005

2007

Coca-Cola C2

2003

Coca-Cola
with Lime

2005

Coca-Cola
Raspberry
Coca-Cola
Zero

Coca-Cola M5

2007

American Samoa, Austria, Belgium,

Brazil, China, Denmark, Federation
of Bosnia and Herzegovina,
Finland, France, Germany, Hong
Kong, Iceland, Korea, Luxembourg,
Macau, Malaysia, Mongolia,
Netherlands, Norway, Runion,
Singapore, Spain, Switzerland,
Taiwan, Tunisia, United Kingdom,
United States, and West Bank-Gaza
Still available in:
Austria, Australia, China, Germany,
Hong Kong, New Zealand (600 mL
only) Malaysia, Sweden (Imported)
and Russia. Was called "Vanilla
Coca-Cola (Vanilla Coke)" during
initial U.S. availability.
It was reintroduced in June 2007 by
popular demand
Was only available in Japan,
Canada, and the United States.
Available in Belgium, Netherlands,
Singapore, Canada, the United
Kingdom, and the United States.

June 2005 End of 2005 Was only available in New Zealand.

2005

2005

Only available in Federation of

Bosnia and Herzegovina, Germany,
Italy, Spain, Mexico and Brazil

Coca-Cola
Black Cherry
Vanilla

2006

Coca-Cola
Blk

2006

Coca-Cola
Citra

2006

Coca-Cola
Light Sango
Coca-Cola
Orange

2006
2007

Middle of
2007

Was replaced by Vanilla Coke in

June 2007

Only available in the United States,

France, Canada, Czech Republic,
Beginning of
Slovak Republic, Federation of
2008
Bosnia and Herzegovina, Bulgaria
and Lithuania
Only available in Federation of
Bosnia and Herzegovina, New
Zealand and Japan.
Only available in France and
Belgium.
Only available in the United
Kingdom and Gibraltar

Logo design

Detail on Elmira Coca-Cola Bottling Plant, Elmira, NY.

The famous Coca-Cola logo was created by John Pemberton's bookkeeper, Frank Mason
Robinson, in 1885.[44] Robinson came up with the name and chose the logo's distinctive
cursive script. The typeface used, known as Spencerian script, was developed in the mid
19th century and was the dominant form of formal handwriting in the United States
during that period.
Robinson also played a significant role in early Coca-Cola advertising. His promotional
suggestions to Pemberton included giving away thousands of free drink coupons and
plastering the city of Atlanta with publicity banners and streetcar signs.[45]

Contour bottle design

Earl R. Dean's original 1915 concept drawing of the contour Coca-Cola bottle.

The prototype never made it to production since its middle diameter was larger than its
base, making it unstable on conveyor belts.
The equally famous Coca-Cola bottle, called the "contour bottle" within the company, but
known to some as the "hobble skirt" bottle, was created in 1915 by bottle designer Earl R.
Dean. In 1915, the Coca-Cola Company launched a competition among its bottle
suppliers to create a new bottle for the beverage that would distinguish it from other

beverage bottles, "a bottle which a person could recognize even if they felt it in the dark,
and so shaped that, even if broken, a person could tell at a glance what it was."[46]
Chapman J. Root, president of the Root Glass Company, turned the project over to
members of his supervisory staff, including company auditor T. Clyde Edwards, plant
superintendent Alexander Samuelsson, and Earl R. Dean, bottle designer and supervisor
of the bottle molding room. Root and his subordinates decided to base the bottle's design
on one of the soda's two ingredients, the coca leaf or the kola nut, but were unaware of
what either ingredient looked like. Dean and Edwards went to the Emeline Fairbanks
Memorial Library and were unable to find any information about coca or kola. Instead,
Dean was inspired by a picture of the gourd-shaped cocoa pod in the Encyclopedia
Britannica. Dean made a rough sketch of the pod and returned back to the plant to show
Mr. Root. He explained to Root how he could transform the shape of the pod into a
bottle. Chapman Root gave Dean his approval.[46]
Faced with the upcoming scheduled maintenance of the mold-making machinery, over
the next 24 hours Dean sketched out a concept drawing which was approved by Root the
next morning. Dean then proceeded to create a bottle mold and produced a small number
of bottles before the glass-molding machinery was turned off.[47]
Chapman Root approved the prototype bottle and a design patent was issued on the bottle
in November, 1915. The prototype never made it to production since its middle diameter
was larger than its base, making it unstable on conveyor belts. Dean resolved this issue
by decreasing the bottle's middle diameter. During the 1916 bottler's convention, Dean's
contour bottle was chosen over other entries and was on the market the same year. By
1920, the contour bottle became the standard for the Coca-Cola Company. Today, the
contour Coca-Cola bottle is one of the most recognized packages on the planet..."even in
the dark!".
As a reward for his efforts, Dean was offered a choice between a $500 bonus or a lifetime
job at the Root Glass Company. He chose the lifetime job and kept it until the OwensIllinois Glass Company bought out the Root Glass Company in the mid-1930s. Dean
went on to work in other Midwestern glass factories.
Although endorsed by some[who?], this version of events is not considered authoritative by
many[who?] who consider it implausible. One alternative depiction has Raymond Loewy as
the inventor of the unique design, but, while Loewy did serve as a designer of Coke cans
and bottles in later years, he was in the French Army the year the bottle was invented and
did not emigrate to the United States until 1919. Others have attributed inspiration for the
design not to the cocoa pod, but to a Victorian hooped dress.
In 1944, Associate Justice Roger J. Traynor of the Supreme Court of California took
advantage of a case involving a waitress injured by an exploding Coca-Cola bottle to
articulate the doctrine of strict liability for defective products. Traynor's concurring
opinion in Escola v. Coca-Cola Bottling Co. is widely recognized as a landmark case in
U.S. law today.[50]

In 1997, Coca-Cola also introduced a "contour can," similar in shape to its famous bottle,
on a few test markets, including Terre Haute, Indiana.[51] The new can has never been
widely released.
A new slim and tall can began to appear in Australia as of December 20, 2006, it cost
AU$1.95. The cans have a distinct resemblance to energy drink cans. The cans were
commissioned by Domino's Pizza and are available exclusively at their restaurants.
In January 2007, Coca-Cola Canada changed "Coca-Cola Classic" labeling, removing the
"Classic" designation, leaving only "Coca-Cola." Coca-Cola stated this is merely a name
change and the product remains the same. The cans still bear the "Classic" logo in the
United States.
In 2007, Coca-Cola introduced an aluminum can designed to look like the original glass
Coca-Cola bottles.
In 2007, the company's logo on cans and bottles changed. The cans and bottles retained
the red color and familiar typeface, but the design was simplified, leaving only the logo
and a plain white swirl (the "dynamic ribbon").
In 2008, in some parts of the world, the plastic bottles for all Coke varieties (including
the larger 1.5- and 2-liter bottles) was changed to include a new plastic screw cap and a
slightly taller contoured bottle shape, designed to evoke the old glass bottles.[52]

Coke Mini

200 mL "stubby" bottle widely available throughout China. These are sold in small shops
for 1 yuan, and must be consumed on site in order to return the bottle.

Coke mini is a 7.5 ounce can packaging of Coca-Cola that debuted in December 2009.
There are plans to also sell smaller cans of Sprite, Fanta Orange, Cherry Coca-Cola and
Barq's Root Beer.

Local competitors
Pepsi is usually second to Coke in sales, but outsells Coca-Cola in some markets. Around
the world, some local brands compete with Coke. In South and Central America Kola
Real, known as Big Cola in Mexico, is a fast-growing competitor to Coca-Cola.[57] On the
French island of Corsica, Corsica Cola, made by brewers of the local Pietra beer, is a
growing competitor to Coca-Cola. In the French region of Brittany, Breizh Cola is
available. In Peru, Inca Kola outsells Coca-Cola, which led The Coca-Cola Company to
purchase the brand in 1999. In Sweden, Julmust outsells Coca-Cola during the Christmas
season. In Scotland, the locally produced Irn-Bru was more popular than Coca-Cola until
2005, when Coca-Cola and Diet Coke began to outpace its sales. In India, Coca-Cola
ranked third behind the leader, Pepsi-Cola, and local drink Thums Up. The Coca-Cola
Company purchased Thums Up in 1993. As of 2004, Coca-Cola held a 60.9% marketshare in India. Tropicola, a domestic drink, is served in Cuba instead of Coca-Cola, due
to a United States embargo. French brand Mecca Cola and British brand Qibla Cola,
popular in the Middle East, are competitors to Coca-Cola. In Turkey, Cola Turka is a
major competitor to Coca-Cola. In Iran and many countries of Middle East, Zam Zam
Cola and Parsi Cola are major competitors to Coca-Cola. In some parts of China Future
cola is a competitor. In Slovenia, the locally produced Cockta is a major competitor to
Coca-Cola, as is the inexpensive Mercator Cola, which is sold only in the country's
biggest supermarket chain, Mercator. In Israel, RC Cola is an inexpensive competitor.
Classiko Cola, made by Tiko Group, the largest manufacturing company in Madagascar,
is a serious competitor to Coca-Cola in many regions. Laranjada is the top-selling soft
drink on the Portuguese island of Madeira. Coca-Cola has stated that Pepsi was not its
main rival in the UK, but rather Robinsons drinks.[citation needed]

Advertising

An 1890s advertisement showing model Hilda Clark in formal 19th century attire. The ad
is titled Drink Coca-Cola 5. (US)

Coca-Cola ghost sign in Fort Dodge, Iowa. Note older Coca-Cola ghosts behind Borax
and telephone ads.

Coca-Cola signboard in Lahore, Pakistan.

Coca-Cola sales booth on the Cape Verde island of Fogo in 2004.

Coca-Cola's advertising has significantly affected American culture, and it is frequently
credited with inventing the modern image of Santa Claus as an old man in a red-andwhite suit. Although the company did start using the red-and-white Santa image in the
1930s, with its winter advertising campaigns illustrated by Haddon Sundblom, the motif
was already common. Coca-Cola was not even the first soft drink company to use the
modern image of Santa Claus in its advertising: White Rock Beverages used Santa in
advertisements for its ginger ale in 1923, after first using him to sell mineral water in
1915. Before Santa Claus, Coca-Cola relied on images of smartly dressed young women
to sell its beverages. Coca-Cola's first such advertisement appeared in 1895, featuring the
young Bostonian actress Hilda Clark as its spokeswoman.
1941 saw the first use of the nickname "Coke" as an official trademark for the product,
with a series of advertisements informing consumers that "Coke means Coca-Cola".That
same year, a song from a Coca-Cola commercial called "I'd Like to Teach the World to
Sing", produced by Billy Davis, became a hit single.
Coke's advertising is pervasive, as one of Woodruff's stated goals was to ensure that
everyone on Earth drank Coca-Cola as their preferred beverage. This is especially true in
southern areas of the United States, such as Atlanta, where Coke was born.
Some of the memorable Coca-Cola television commercials between 1960 through 1986
were written and produced by former Atlanta radio veteran Don Naylor (WGST 1936
1950, WAGA 19511959) during his career as a producer for the McCann Erickson
advertising agency. Many of these early television commercials for Coca-Cola featured
movie stars, sports heroes and popular singers.
During the 1980s, Pepsi-Cola ran a series of television advertisements showing people
participating in taste tests demonstrating that, according to the commercials, "fifty
percent of the participants who said they preferred Coke actually chose the Pepsi."
Statisticians were quick to point out the problematic nature of a 50/50 result: most likely,
all the taste tests really showed was that in blind tests, most people simply cannot tell the
difference between Pepsi and Coke. Coca-Cola ran ads to combat Pepsi's ads in an
incident sometimes referred to as the cola wars; one of Coke's ads compared the socalled Pepsi challenge to two chimpanzees deciding which tennis ball was furrier.
Thereafter, Coca-Cola regained its leadership in the market.

Selena was a spokesperson for Coca-Cola from 1989 till the time of her death. She filmed
three commercials for the company. In 1994, to commemorate her five years with the
company, Coca-Cola issued special Selena coke bottles.
The Coca-Cola Company purchased Columbia Pictures in 1982, and began inserting
Coke-product images in many of its films. After a few early successes during CocaCola's ownership, Columbia began to under-perform, and the studio was sold to Sony in
1989.
Coca-Cola has gone through a number of different advertising slogans in its long history,
including "The pause that refreshes," "I'd like to buy the world a Coke," and "Coke is it"
(see Coca-Cola slogans).
In 2006, Coca-Cola introduced My Coke Rewards, a customer loyalty campaign where
consumers earn points by entering codes from specially marked packages of Coca-Cola
products into a website. These points can be redeemed for various prizes or sweepstakes
entries.[68]

Holiday campaigns

Coca-Cola Christmas truck in Dresden, Germany.

The "Holidays are coming!" advertisement features a train of red delivery trucks,
emblazoned with the Coca-Cola name and decorated with electric lights, driving through
a snowy landscape and causing everything that they pass to light up and people to watch
as they pass through.
The advertisement fell into disuse in 2001, as the Coca-Cola company restructured its
advertising campaigns so that advertising around the world was produced locally in each
country, rather than centrally in the company's headquarters in Atlanta, Georgia.
However, in 2007, the company brought back the campaign after, according to the
company, many consumers telephoned its information center saying that they considered
it to mark the beginning of Christmas. The advertisement was created by U.S. advertising
agency Doner, and has been part of the company's global advertising campaign for many
years.

Keith Law, a producer and writer of commercials for Belfast CityBeat, was not
convinced by Coca-Cola's reintroduction of the advertisement in 2007, saying that "I
don't think there's anything Christmassy about HGVs and the commercial is too generic."
In 2001, singer Melanie Thornton recorded the campaign's advertising jingle as a single,
Wonderful Dream (Holidays are Coming), which entered the pop-music charts in
Germany at no. 9.[73][74] In 2005, Coca-Cola expanded the advertising campaign to radio,
employing several variations of the jingle.

Sports sponsorship

Special aluminum bottle designs, designed exclusively for the Vancouver 2010 Olympic
Winter Games Torch Relay. Available in Canada.
Coca-Cola was the first commercial sponsor of the Olympic games, at the 1928 games in
Amsterdam, and has been an Olympics sponsor ever since.[76] This corporate sponsorship
included the 1996 Summer Olympics hosted in Atlanta, which allowed Coca-Cola to
spotlight its hometown. Most recently, Coca-Cola has released localized commercials for
the 2010 Olympics in Vancouver; one Canadian commercial referred to Canada's hockey
heritage and was modified after Canada won the gold medal game on February 28, 2010
by changing the ending line of the commercial to say "Now they know whose game
they're playing".
Since 1978, Coca-Cola has sponsored each FIFA World Cup, and other competitions
organised by FIFA. In fact, one FIFA tournament trophy, the FIFA World Youth
Championship from Tunisia in 1977 to Malaysia in 1997, was called "FIFA Coca
Cola Cup".[78] In addition, Coca-Cola sponsors the annual Coca-Cola 600 and Coke Zero
400 for the NASCAR Sprint Cup Series at Charlotte Motor Speedway in Concord, North
Carolina and Daytona International Speedway in Daytona, Florida. Coca-Cola has a long
history of sports marketing relationships, which over the years have included Major
League Baseball, the National Football League, National Basketball Association and the
National Hockey League, as well as with many teams within those leagues. Coca-Cola is
the official soft drink of many collegiate football teams throughout the nation.

Coca-Cola was one of the official sponsors of the 1996 Cricket World Cup held on the
Indian subcontinent. Coca Cola is also one of the associate sponsor of Delhi Daredevils
in Indian Premier League.
In England, Coca-Cola is the main sponsor of The Football League, a name given to the
three professional divisions below the Premier League in football (soccer). It is also
responsible for the renaming of these divisions until the advent of Coca-Cola
sponsorship, they were referred to as Divisions One, Two and Three. Since 2004, the
divisions have been known as The Championship (equiv. of Division 1), League One
(equiv. of Div. 2) and League 2 (equiv. of Division 3). This renaming has caused unrest
amongst some fans, who see it as farcical that the third tier of English Football is now
called "League One." In 2005, Coca-Cola launched a competition for the 72 clubs of the
football league it was called "Win a Player". This allowed fans to place 1 vote per day
for their beloved club, with 1 entry being chosen at random earning 250,000 for the
club; this was repeated in 2006. The "Win A Player" competition was very controversial,
as at the end of the 2 competitions, Leeds United AFC had the most votes by more than
double, yet they did not win any money to spend on a new player for the club. In 2007,
the competition changed to "Buy a Player". This competition allowed fans to buy a bottle
of Coca-Cola Zero or Coca-Cola and submit the code on the wrapper on the Coca-Cola
website {www.coca-colafootball.co.uk}. This code could then earn anything from 50p to
100,000 for a club of their choice. This competition was favored over the old "Win A
Player" competition, as it allowed all clubs to win some money.
Introduced March 1, 2010, in Canada, to celebrate the 2010 Olympics, Coca Cola will
sell gold coloured cans in packs of 12 355 mL each, in select stores.

In mass media
Coca-Cola has been prominently featured in countless films and television programs. It
was a major plot element in films such as One, Two, Three, The Coca-Cola Kid, and The
Gods Must Be Crazy. It provides a setting for comical corporate shenanigans in the novel
Syrup by Maxx Barry. And in music, in the Beatles' song, "Come Together", the lyrics
said, "He shoot Coca-Cola, he say...".

Health effects
Since studies indicate "soda and sweetened drinks are the main source of calories in [the]
American diet",most nutritionists advise that Coca-Cola and other soft drinks can be
harmful if consumed excessively, particularly to young children whose soft drink
consumption competes with, rather than complements, a balanced diet. Studies have
shown that regular soft drink users have a lower intake of calcium, magnesium, ascorbic
acid, riboflavin, and vitamin A.[81] The drink has also aroused criticism for its use of
caffeine, which can cause physical dependence.[82] A link has been shown between longterm regular cola intake and osteoporosis in older women (but not men). This was
thought to be due to the presence of phosphoric acid, and the risk was found to be same
for caffeinated and noncaffeinated colas, as well as the same for diet and sugared colas.

A common criticism of Coke based on its allegedly toxic acidity levels has been found to
be baseless by researchers; lawsuits based on these notions have been dismissed by
several American courts for this reason. Although numerous court cases have been filed
against The Coca-Cola Company since the 1920s, alleging that the acidity of the drink is
dangerous, no evidence corroborating this claim has been found. Under normal
conditions, scientific evidence indicates Coca-Cola's acidity causes no immediate harm.
Since 1980 in the U.S., Coke has been made with high-fructose corn syrup (HFCS) as an
ingredient. Originally it was used in combination with more expensive cane-sugar, but by
late 1984 the formulation was sweetened entirely with HFCS. Some nutritionists caution
against consumption of HFCS because it may aggravate obesity and type-2 diabetes more
than cane sugar. Also, a 2009 study found that almost half of tested samples of
commercial HFCS contained mercury, a toxic substance.
In India, there is a major controversy whether there are pesticides and other harmful
chemicals in bottled products, including Coca-Cola. In 2003 the Centre for Science and
Environment (CSE), a non-governmental organization in New Delhi, said aerated waters
produced by soft drinks manufacturers in India, including multinational giants PepsiCo
and Coca-Cola, contained toxins including lindane, DDT, malathion and chlorpyrifos
pesticides that can contribute to cancer and a breakdown of the immune system. CSE
found that the Indian produced Pepsi's soft drink products had 36 times the level of
pesticide residues permitted under European Union regulations; Coca-Cola's soft drink
was found to have 30 times the permitted amount. CSE said it had tested the same
products sold in the U.S. and found no such residues. After the pesticide allegations were
made in 2003, Coca-Cola sales in India declined by 15 percent. In 2004 an Indian
parliamentary committee backed up CSE's findings and a government-appointed
committee was tasked with developing the world's first pesticide standards for soft
drinks. The Coca-Cola Company has responded that its plants filter water to remove
potential contaminants and that its products are tested for pesticides and must meet
minimum health standards before they are distributed. In the Indian state of Kerala sale
and production of Coca-Cola, along with other soft drinks, was initially banned after the
allegations, until the High Court in Kerala overturned ruled that only the federal
government can ban food products. Coca-Cola has also been accused of excessive water
usage in India.
The 2008 Ig Nobel Prize (a parody of the Nobel Prizes) in Chemistry was awarded to
Sheree Umpierre, Joseph Hill, and Deborah Anderson, for discovering that Coca-Cola is
an effective spermicide, and to C.Y. Hong, C.C. Shieh, P. Wu, and B.N. Chiang for
proving it is not.

Criticism
Main article: Criticism of Coca-Cola
Coca-Cola has been criticized for alleged adverse health effects, its aggressive marketing
to children, exploitative labor practices, high levels of pesticides in its products, building
plants in Nazi Germany which employed slave labor, environmental destruction,

monopolistic business practices, and hiring paramilitary units to murder trade union
leaders. In October 2009, in an effort to improve their image, Coca-Cola partnered with
the American Academy of Family Physicians, providing a $500,000 grant to help
promote healthy-lifestyle education; the partnership spawned sharp criticism of both
Coca-Cola and the AAFP by physicians and nutritionists.

Use as political and corporate symbol

Coca-Cola advertising in the High Atlas mountains in Morocco.

Coke dispenser flown aboard the Space Shuttle in 1996. (US)

The Coca-Cola drink has a high degree of identification with the United States, being
considered by some an "American Brand" or as an item representing America. The
identification with the spread of American culture has led to the pun "CocaColanization".
The drink is also often a metonym for the Coca-Cola Company.
There are some consumer boycotts of Coca-Cola in Arab countries due to Coke's early
investment in Israel during the Arab League boycott of Israel (its competitor Pepsi stayed
out of Israel). Mecca Cola and Pepsi have been successful alternatives in the Middle East.

A Coca-Cola fountain dispenser (officially a Fluids Generic Bioprocessing Apparatus-2

or FGBA-2) was developed for use on the Space Shuttle as "a test bed to determine if
carbonated beverages can be produced from separately stored carbon dioxide, water and
flavored syrups and determine if the resulting fluids can be made available for
consumption without bubble nucleation and resulting foam formation". The unit flew in
1996 aboard STS-77 and held 1.65 liters each of Coca-Cola and Diet Coke.

Pepsi
Pepsi ads often focused on celebrities, choosing Pepsi over Coke, supporting Pepsi's
positioning as "The Choice of a New Generation." In 1975, Pepsi began showing people
doing blind taste tests called Pepsi Challenge in which they preferred one product over
the other, and then they began hiring more and more popular spokespersons to promote
their products.
In the late 1990s, Pepsi launched its most successful long-term strategy of the Cola Wars,
Pepsi Stuff. Consumers were invited to "Drink Pepsi, Get Stuff" and collect Pepsi Points
on billions of packages and cups. They could redeem the points for free Pepsi lifestyle
merchandise. After researching and testing the program for over two years to ensure that
it resonated with consumers, Pepsi launched Pepsi Stuff, which was an instant success.
Tens of millions of consumers participated. Pepsi outperformed Coke during the summer
of the Atlanta Olympics - held in Coke's hometown - where Coke was a lead sponsor of
the Games. Due to its success, the program was expanded to include Mountain Dew, and
into Pepsi's international markets worldwide. The company continued to run the program
for many years, continually innovating with new features each year.[1]
The Pepsi Stuff promotion became the subject of a lawsuit. In one of the many
commercials, Pepsi showed a young man in the cockpit of a Harrier Jump Jet. Below ran
the caption "Harrier Jet: 7 million Pepsi Points." There was a mechanism for buying
additional Pepsi Points to complete a Pepsi Stuff order. John Leonard, of Seattle,
Washington, sent in a Pepsi Stuff request with the maximum amount of points and a
check for over $700,000US to make up for the extra points he needed. Pepsi did not
accept the request and Leonard filed suit. The judgment was that a reasonable person
viewing the commercial would realize that Pepsi was not, in fact, offering a Harrier Jet.
In response to the suit, Pepsi added the words "Just Kidding" under the portion of the

commercial featuring the jet as well as changing the "price" to 700 million Pepsi points
(see Leonard v. Pepsico, Inc.).
Coca-Cola and Pepsi engaged in a "cyber-war" with the re-introduction of Pepsi Stuff in
2005 & Coca-Cola retaliated with Coke Rewards. This cola war has now concluded, with
Pepsi Stuff ending its services and Coke Rewards still offering prizes on their website.
Both were loyalty programs that give away prizes and product to consumers after
collecting bottle caps and 12 or 24 pack box tops, then submitting codes online for a
certain number of points. However, Pepsi's online partnership with Amazon allowed
consumers to buy various products with their "Pepsi Points", such as mp3 downloads.
Both Coca-Cola and Pepsi previously had a partnership with the iTunes Store.

In space

In 1985, Coca-Cola and Pepsi were launched into space aboard the Space Shuttle
Challenger on STS-51-F. The companies had designed special cans (officially the
Carbonated Beverage Dispenser Evaluation payload or CBDE) to test packaging and
dispensing techniques for use in zero G conditions. The experiment was classified a
failure by the shuttle crew, primarily due to the lack of both refrigeration and gravity.
[citation needed]

The "Coca-Cola Space Dispenser" (Fluids Generic Bioprocessing Apparatus-1, or

FGBA-1) was designed to provide astronauts the opportunity to enjoy Coca-Cola and
Diet Coke in the weightless environment of space, and to "provide baseline data on
changes in astronauts' taste perception of beverages consumed in microgravity."[3] It held
1.65 liters each of Coca-Cola and Diet Coke. An astronaut would dispense the carbonated
drink of choice into a "Fluids Transfer Unit" or sealed drinking cup through a quick
connect on the dispenser. To save power, the dispenser would chill the liquid on demand
via cooling coils between the storage container and the quick connect fitting. The FGBA1 and 18 of the "Fluid Transfer Units" flew aboard the Space Shuttle Discovery in 1995.
(STS-63)[4]
Further development led to a Coca-Cola fountain dispenser (Fluids Generic
Bioprocessing Apparatus-2 or FGBA-2) intended as "a test bed to determine if
carbonated beverages can be produced from separately stored carbon dioxide, water and
flavored syrups and determine if the resulting fluids can be made available for
consumption without bubble nucleation and resulting foam formation".[5] This unit
dispensed Powerade sports drink in addition to Coca-Cola and Diet Coke. This unit flew

on STS-77 aboard Space Shuttle Endeavour in 1996. Unfortunately, the FGBA-2 did not
work as expected.

Second Cola War

During the 1990s, a "second cola war" was reported in the United Kingdom. This time it
was due to the launch of Virgin Cola, as well as Sainsbury's store brand Classic Cola,
which, unlike most store brand colas, was designed to look like a top product worthy of
competition. For a few years both colas were competitive with Coca-Cola and Pepsi; at
one point Coca-Cola even sued Sainsbury's claiming the design of the Classic Cola can
was too similar to Coke's. However, today, both Virgin and Classic Cola are far behind
the two major brands.
The high-publicity marketing also continued into the 1990s. In 1997, the Spice Girls
(then at their peak) signed a multi-million pound sponsorship deal with Pepsi. They
starred in three Pepsi commercials; released two limited edition singles with Pepsi,
"Move Over" and "Step To Me"; featured on Pepsi packaging; and performed two live
concerts in Istanbul organised and sponsored by the company.

"Cola Wars" in popular culture

A satirical look at the cola war can be found in the 1985 film The Coca-Cola Kid,
starring Eric Roberts.
Rock musician Neil Young's song This Note's for You off of his 1988 album This
Note's for You contains the lyrics; "Ain't singin' for Pepsi Ain't singin' for Coke"

Rock musician Billy Joel mentions the "Cola Wars" in his number-one hit "We
Didn't Start the Fire."
Audio collage group Negativland utilize advertising and media reporting of the
"Cola Wars" in their album Dispepsi.
South Park referenced the Cola Wars in the 2003 episode "It's Christmas in
Canada", when one character stated that Canada was "devastated by the Cola
Wars."[6]
The online game Kingdom of Loathing features a literal Cola War between the
Dyspepsi-Cola and Cloaca-Cola armies.
In the Red Dwarf novel Infinity Welcomes Careful Drivers, the origins of Kryten's
original ship, the Nova 5, are given as the ship being involved in an advertising
campaign for Coke.
Punk Cabaret band The Dresden Dolls makes mention of the Cola Wars in the
song "Modern Moonlight," on their album Yes, Virginia...: "Coke and Pepsi
finally found a compromise...."
In 1997, the satirical newspaper The Onion wrote of a "memorial" for the jobs lost
to the Cola Wars.[7]
The episode "Fry and the Slurm Factory" from the comedy series Futurama
references the Cola Wars by stating they will market 'New Slurm', "then, when
everyone hates it, we'll bring back Slurm Classic, and make billions!"
In Fallout: New Vegas a mascot called "Festus" for the drink Sunset Sarsparilla
will make mention of Nuka-Cola, the rival soft drink of Sunset Sarsaparilla. After
this, he'll mention that to avoid legal action from Nuka-Cola, he must inform you
that Nuka-cola is a "Swell" drink, but sometimes people just want something
different. This is probably reference to the Cola Wars.

The Soft Drink industry has been assigned as the vehicle for tackling the topic of industry
analysis and competitive dynamics. The case covers developments in the soft drink
industry through 1993. It describes how the industry evolved into its current structure
largely following Coca-Colas leadership. What is particularly interesting is determining
why the major competitors in the industry have been able to earn above normal returns
for close to 100 years, and why the industry is organized the way it is. The case allows us
to analyze how the actions and reactions of competitors over time work to create their
own industry structure. The case also allows us to examine how prior strategic
commitments to particular strategies create competitive positions, which in turn constrain
the future competitive moves of firms. Since competitive positioning determines a firms
long-run performance, we need to thoroughly grasp the essentials of what makes some
competitive positions and competitive strategies more viable, and others not, and why.

1. Why has the soft drink industry been so profitable?

a. Since 1970 consumption grew by an average of 3%
b. From 1975 to 1995 both Coke and Pepsi achieve average annual growth of
around 10%
c. Americans drank more soda than any other beverage

d. Head-to-Head Competition between both Coke and Pepsi reinforced brand

recognition of each other. This assumes that marketing added to profits
rather than eating them up.
e. Very large market share. 53% in year 2000.
f. Average 10.65% net profit in sales for both Pepsi and Coke.

2. Why has Coke been so successful? Why was Coke so extraordinarily profitable?
a. Very High Market Share. Strong marketing campaign. A unique and
globally appreciated product. Apart from Pepsi, no strong competition.
b. Coke had high profit margins by shifting some cost to bottlers. Globally recognized
product that could be sold for a premium. Expanded manufacturing and distribution
system that kept prices low.
3. Prepare two five forces models of the Soft Drink Industry: one for the late
1970s/early 1980s and one for the mid 1900s. [Be sure to show at least the
concentrate and bottlers segments of the industry in your diagrams. Note that the
bottlers are buyers from the concentrate perspective, and the concentrate
manufactures are suppliers from the bottlers perspective.] How have the
industrys competitive forces changed over time?
a. In the very early years there was plenty of competition between small cola companies.
Coke emerged as the strong leader and Pepsi soon followed. Up until recent there was
minimal competition
4. Compare the economics of the concentrate business to the bottling business: why
is the profitability so different? Why do concentrate producers want to integrate
into bottling?
a. Concentrate business: Concentrate producers were dependent on the Pepsi and Coke
bottling network to distribute their products. Starting and maintaining a concentrate
manufacturing plant involved little capital investment in machinery, overhead, and labor.
Significant costs were for advertising, promotion, market research, and bottler relations.
Producers negotiated with bottlers major suppliers. One factory could server the entire
united states.
b. Bottlers: Purchased concentrate, added carbonated water, added corn syrup, bottled it,
and delivered it to customer accounts. Gross Profits were high but operating margins
were razor thing. Bottlers handled merchandising. Bottlers could also work with other
non-cola brands.
5. What is happening in the soft drink industry? How do the major developments
affect smaller competitors?
a. A rise of non-cola beverages.
b. Bottled water.
c. Sports drinks.

d. Tea based drinks.

e. Juice based drinks.
f. Dairy based drinks.
g. Non-carb based drinks.
h. Some smaller competitors have been purchase (SoBe by Pepsi) while others now have
to face stiff competition from Pepsi and Code.

6. How was Pepsi able to gain share in 1950s? In the 1960s and early 1970s? After
the Pepsi Challenge? Consider each period separately, and be specific. Why didnt
Coke respond? What provoked the eventual response by Coke beginning in the
1980s?
a. 1950s: Alfred Steele, a former Coca-Cola marketing executive, became Pepsis CEO.
Pepsi introduced Beat Coke theme Pepsi introduced 26-ounce bottle, targeting family
consumption. Coke stayed with its 6.5-ounce bottle. For reference McDonalds Supersize
Coke was 42 ounces.
b. 1960s: New CEO, new slogan, Pepsi Generation. By focusing on the younger
population Pepsi narrowed Cokes lead to a 2-to-1 margin. Pepsi had larger and more
modern bottling facilities. Both groups starting adding new soft drink brands. Pepsi
merged with Frito-lay to become PepsiCo. Coke wouldnt even mention Pepsis name
during meetings.
c. Pepsi Challenge: Starting in Texas, Pepsis bottlers had public blind taste tests to prove
that Pepsi tasted better. This marking stunt increased sales significantly. Pepsi gained a
1.4 point lead in food store leads. Coke countered with rebates and renegotiations with
franchise bottlers.
d. Cokes response: Coke got a new CEO, Roberto Goizueta. Coke cut costs (used corn
syrup instead of sugar), doubled advertising spending, and sold off most non-CSD
business. Diet Coke was introduced to become a phenomenal success. Coke tried to be
innovative by changing its formula, but that failed miserably. Coke introduced 11 new
products. Pepsi emulated most of Cokes strategic moves.
7. Will Coke and Pepsi sustain their profits through the next decade? What would
you recommend to Coke to ensure its success? To Pepsi?
a. It should not be a problem to sustain their profits through the next decade. The more
important question is whether they can sustain their historical rate of growth. To do so
they need to seek out new markets and increase consumption in currently developing
markets such as China and India
b. I would recommend Coke to focus on its emerging international market. I would also
encourage Coke to expand their offerings. I think Coke made a serious mistake when
they failed to purchase Quaker Oats and with it the Gatorade Sports Drink line. If Coke
focuses on several beverage offerings they can leverage their internal bottling and
distribution infrastructure. Different types of beverages can keep Cokes overall profit
intact when there is a shift in consumer preference, such as a shift from soft drinks to

healthier alternatives (Think of the effect Atkins had on the food industry)
c. For Pepsi I would basically recommend the same thing as Coke. I would encourage
Pepsi to focus on its line of soft drink alternatives, which seem to have a much stronger
market share than Cokes line. I would encourage Pepsi to only compete with Coke when
it is profitable to do so.

1. SWOT ANALYSIS: Strengths Coca-Cola has been an intricate part of American

culture for over a century. The products image is laden with sentimentality, and
this is an image many people have taken deeply to heart. The Coca-Cola image is
displayed on T-shirts, hats, and collectible memorabilia. This extremely
recognizable branding is one of Coca-Colas greatest strengths. Enjoyed more
than 685 million times a day around the world Coca-Cola stands as a simple, yet
powerful symbol of quality and enjoyment (Allen, 1995).
Additionally, according to Bettman, et. al, (1998) Coca-Colas bottling system is
one of their greatest strengths. It allows them to conduct business on a global
scale while at the same time maintain a local approach. The bottling companies
are locally owned and operated by independent business people who are
authorized to sell products of the Coca-Cola Company. Because Coke does not
have outright ownership of its bottling network, its main source of revenue is the
sale of concentrate to its bottlers (Bettman, et. al, 1998).
Weaknesses: Although domestic business as well as many international markets
are thriving (volumes in Latin America were up 12%), Coca-Cola has recently
reported some "declines in unit case volumes in Indonesia and Thailand due to
reduced consumer purchasing power." According to an article in Fortune
magazine, "In Japan, unit case sales fell 3% in the second quarter [of 1998]...scary
because while Japan generates around 5% of worldwide volume, it contributes
three times as much to profits. Latin America, Southeast Asia, and Japan account
for about 35% of Coke's volume and none of these markets are performing to
expectation (Mclean, 1998).
Opportunities: Brand recognition is the significant factor affecting Cokes
competitive position. Coca-Colas brand name is known well throughout 90% of
the world today. The primary concern over the past few years has been to get this
name brand to be even better known. Packaging changes have also affected sales
and industry positioning, but in general, the public has tended not to be affected
by new products (Allen, 1995).
Coca-Colas bottling system also allows the company to take advantage of infinite
growth opportunities around the world. This strategy gives Coke the opportunity
to service a large geographic, diverse, area (Bettman, et. al, 1998).

Threats: Currently, the threat of new viable competitors in the carbonated soft
drink industry is not very substantial. The threat of substitutes, however, is a very
real threat. The soft drink industry is very strong, but consumers are not
necessarily married to it. Possible substitutes that continuously put pressure on
both Pepsi and Coke include tea, coffee, juices, milk, and hot chocolate (Cola
Wars, 1991).
Even though Coca-Cola and Pepsi control nearly 40% of the entire beverage
market, the changing health-consciousness of the market could have a serious
affect. Of course, both Coke and Pepsi have already diversified into these
markets, allowing them to have further significant market shares and offset any
losses incurred due to fluctuations in the market (Cola Wars, 1991).
Consumer buying power also represents a key threat in the industry. The rivalry
between Pepsi and Coke has produce a very slow moving industry in which
management must continuously respond to the changing attitudes and demands of
their consumers or face losing market share to the competition. Furthermore,
consumers can easily switch to other beverages with little cost or consequence
(Cola Wars, 1991).
2. BOSTON CCONSULTING GROUP MATRIX
In accordance with the BCG matrix, I would recommend the following strategies
for Coca-cola products in each category:
Dog Strategy: Either invest to earn market share or consider disinvesting.
Star Strategy: Invest profits for future growth. Question Mark Strategy: Either
invest heavily in order to push the products to star status, or divest in order to
avoid it becoming a Dog.
Cash Cow Strategy: Use profits to finance new products and growth elsewhere.
3.LIFE CYCLE:
To be able to market its product properly, a firm must be aware of the product life
cycle of its product. The standard product life cycle tends to have five phases:
Development, Introduction, Growth, Maturity and Decline. Coca-Cola is currently
in the maturity stage, which is evidenced primarily by the fact that they have a
large, loyal group of stable customers.
Furthermore, cost management, product differentiation and marketing have
become more important as growth slows and market share becomes the key
determinant of profitability. In foreign markets the product life cycle is in more of
a growth trend Coke's advantage in this area is mainly due to its establishment

strong branding and it is now able to use this area of stable profitability to
subsidize the domestic "Cola Wars".

Cola Wars : Five Forces Analysis

1. Soft Drink Industry Five Forces Analysis:

Soft drink industry is very profitable, more so for the concentrate producers than the
bottlers. This is surprising considering the fact that product sold is a commodity which
can even be produced easily. There are several reasons for this, using the five forces
analysis we can clearly demonstrate how each force contributes the profitability of the
industry.
Barriers to Entry:
The several factors that make it very difficult for the competition to enter the soft drink
market include:

Bottling Network: Both Coke and PepsiCo have franchisee agreements with their
existing bottlers who have rights in a certain geographic area in perpetuity. These
agreements prohibit bottlers from taking on new competing brands for similar
products. Also with the recent consolidation among the bottlers and the backward
integration with both Coke and Pepsi buying significant percent of bottling
companies, it is very difficult for a firm entering to find bottlers willing to
distribute their product.

The other approach to try and build their bottling plants would be very capital-intensive
effort with new efficient plant capital requirements in 1998 being $75 million.

Advertising Spend: The advertising and marketing spend (Case Exhibit 5 & 6) in
the industry is in 2000 was around $ 2.6 billion (0.40 per case * 6.6 billion cases)
mainly by Coke, Pepsi and their bottlers. The average advertisement spending
per point of market share in 2000 was 8.3 million (Exhibit 2). This makes it
extremely difficult for an entrant to compete with the incumbents and gain any
visibility.

Brand Image / Loyalty: Coke and Pepsi have a long history of heavy advertising
and this has earned them huge amount of brand equity and loyal customers all
over the world. This makes it virtually impossible for a new entrant to match this
scale in this market place.

Retailer Shelf Space (Retail Distribution): Retailers enjoy significant margins

of 15-20% on these soft drinks for the shelf space they offer. These margins are
quite significant for their bottom-line. This makes it tough for the new entrants
to convince retailers to carry/substitute their new products for Coke and Pepsi.

Fear of Retaliation: To enter into a market with entrenched rival behemoths like
Pepsi and Coke is not easy as it could lead to price wars which affect the new
comer.

Suppliers:

Commodity Ingredients: Most of the raw materials needed to produce

concentrate are basic commodities like Color, flavor, caffeine or additives, sugar,
packaging. Essentially these are basic commodities. The producers of these
products have no power over the pricing hence the suppliers in this industry are
weak.

Buyers:
The major channels for the Soft Drink industry (Exhibit 6) are food stores, Fast food
fountain, vending, convenience stores and others in the order of market share. The
profitability in each of these segments clearly illustrate the buyer power and how
different buyers pay different prices based on their power to negotiate.

Food Stores: These buyers in this segment are some what consolidated with
several chain stores and few local supermarkets, since they offer premium shelf
space they command lower prices, the net operating profit before tax (NOPBT)
for concentrate producers in this segment is $0.23/case

Convenience Stores: This segment of buyers is extremely fragmented and hence

have to pay higher prices, NOPBT here is $0.69 /case.

Fountain: This segment of buyers are the least profitable because of their large
amount of purchases hey make, It allows them to have freedom to negotiate. Coke
and Pepsi primarily consider this segment Paid Sampling with low margins.
NOPBT in this segment is $0.09 /case.

Vending: This channel serves the customers directly with absolutely no power
with the buyer, hence NOPBT of $0.97/case.

Substitutes: Large numbers of substitutes like water, beer, coffee, juices etc are
available to the end consumers but this countered by concentrate providers by huge
advertising, brand equity, and making their product easily available for consumers, which
most substitutes cannot match. Also soft drink companies diversify business by offering
substitutes themselves to shield themselves from competition. Rivalry:
The Concentrate Producer industry can be classified as a Duopoly with Pepsi and Coke as
the firms competing. The market share of the rest of the competition is too small to cause
any upheaval of pricing or industry structure. Pepsi and Coke mainly over the years
competed on differentiation and advertising rather than on pricing except for a period in
the 1990s. This prevented a huge dent in profits. Pricing wars are however a feature in
their international expansion strategies.

2. Economics of Bottling vs Concentrate Business

Higher number of bottlers when compared to the concentrate producers which

fosters competition and reduces margins in the bottling business
Huge capital costs to set up an efficient plant for the bottlers while the capital
costs in concentrate business are minimal
Costs for distribution and production account for around 65% of sales for bottlers
while in the concentrate business its around 17%
Most of the brand equity created in the business remains with concentrate
producers

Possible Reasons for Vertical Integration:

With the decrease in the number of bottlers from 2000 in 1970 to less than 300 in
2000, the concentrate producers were concerned about the bottlers clout and
started acquiring stakes in the bottling business.
They could offer attractive packaging to the end consumer.
To preempt new competition from entering business if they control the bottling.

3. Effect of competition between Coke and Pepsi on industry profits:

During the 1960s and 70s Coke and Pepsi concentrated on a differentiation and
advertising strategy. The Pepsi Challenge in 1974 was a prime example of this strategy
where blind taste tests were hosted by Pepsi in order to differentiate itself as a better
tasting product from Coke.
However during the early 1990s bottlers of Coke and Pepsi employed low priced
strategies in the supermarket channel in order to compete with store brands, This had a
negative effect on the profitability of the bottlers. Net profit as a percentage of sales for
bottlers during this period was in the low single digits (-2.1-2.9% Exhibit 4) Pepsi and
Coke were however able to maintain the profitability through sustained growth in Frito
Lay and International sales respectively. The bottling companies however in the late 90s
decided to abandon the price war, which was not doing industry any good by raising the
prices.
Coke was more successful internationally compared to Pepsi due to its early lead as Pepsi
had failed to concentrate on its international business after the world war and prior to the
70s. Pepsi however sought to correct this mistake by entering emerging markets where it
was not at a competitive disadvantage with respect to Coke as it failed to make any heady
way in the European market.

4. Can Coke and Pepsi sustain their profits in the wake of flattening demand and
growing popularity of non-carbonated drinks?
Yes Coke can Pepsi can sustain their profits in the industry because of the following
reasons:

The industry structure for several decades has been kept intact with no new
threats from new competition and no major changes appear on the radar line

This industry does not have a great deal of threat from disruptive forces in
technology.

Coke and Pepsi have been in the business long enough to accumulate great
amount of brand equity which can sustain them for a long time and allow them to
use the brand equity when they diversify their business more easily by leveraging
the brand.

Globalization has provided a boost to the people from the emerging economies to
move up the economic ladder. This opens up huge opportunity for these firms

Per capita consumption in the emerging economies is very small compared to the
US market so there is huge potential for growth.

Coke and Pepsi can diversify into noncarbonated drinks to counter the flattening
demand in the carbonated drinks. This will provide diversification options and
provide an opportunity to grow.

5.Impact of globalization on Industry structure:

Globalization provides Coke and Pepsi with both unique challenges as well as
opportunities at the same time. To certain extent globalization has changed the industry
structure because of the following factors.

Rivalry Intensity: Coke has been more dominant (53% of market share in 1999).
in the international market compared to Pepsi (21% of market share in 1999) This
can be attributed to the fact that it took advantage of Pepsi entering the markets
late and has set up its bottlers and distribution networks especially in developed
markets. This has put Pepsi at a significant disadvantage compared to the US
Market.
Pepsi is however trying to counter this by competing more aggressively in the
emerging economies where the dominance of Coke is not as pronounced, With
the growth in emerging markets significantly expected to exceed the developed
markets the rivalry internationally is going to be more pronounced.

Barriers to Entry: Barriers to entry are not as strong in emerging markets and it
will be more challenging to Coke and Pepsi, where they would have to deal with
regulatory challenges, cultural and any existing competition who have their
distribution networks already setup. The will lack the clout that have with the
bottlers in the US.

Suppliers: Since the raw materials are commodities there should be no problems
on this front this is not any different

Customers: Internationally retailers and fountain sales are going to be weaker as

they are not consolidated, like in the US Market. This will provide Coke and
Pepsi more clout and pricing power with the buyers

Substitutes: Since many of the markets are culturally very different and vast
numbers of substitutes are available, added to the fact that carbonated products
are not the first choices to quench thirst in these cultures present additional
significant challenges. The consumption is very low in the emerging markets is
miniscule compared to the US market. A lot more money would have to be spent
on advertising to get people used the carbonated drinks.

COLA WAR CONTINUES : COKE AND PEPSI IN THE TWENTY

FIRST CENTURY
1. Why is the soft drink industry so profitable?
An industry analysis through Porters Five Forces reveals that market forces are favorable
for profitability.
Defining the industry: Both concentrate producers (CP) and bottlers are profitable. These
two parts of the industry are extremely interdependent, sharing costs in procurement,
production, marketing and distribution.Many of their functions overlap; for instance, CPs
do some bottling, and bottlers conduct many promotional activities. The industry is
already vertically integrated to some extent. They also deal with similar suppliers and
buyers. Entry into the industry would involve developing operations in either or both
disciplines. Beverage substitutes would threaten both CPs and their associated bottlers.
Because of operational overlap and similarities in their market environment, we can
include both CPs and bottlers in our definition of the soft drink industry. In 1993, CPs
earned 29% pretax profits on their sales, while bottlers earned 9% profits on their sales,
for a total industry profitability of 14% (Exhibit 1). This industry as a whole generates
positive economic profits.
Rivalry: Revenues areextremely concentrated in this industry, with Coke and Pepsi,
together with their associated bottlers, commanding 73% of the case market in 1994.
Adding in the next tier of soft drink companies, the top six controlled 89% of the market.
In fact, one could characterize the soft drink market as an oligopoly, or even a duopoly
between Coke and Pepsi, resulting in positive economic profits. To be sure, there was
tough competition between Coke and Pepsi for market share, and this occasionally
hampered profitability.For example, price wars resulted in weak brand loyalty and eroded
margins for both companies in the 1980s. The Pepsi Challenge, meanwhile, affected
market share without hampering per case profitability, as Pepsi was able to compete on
attributes other than price.
Substitutes: Through the early 1960s, soft drinks were synonymous with colas in the
mind of consumers. Over time, however, other beverages, from bottled water to teas,
became more popular, especially in the 1980s and 1990s. Coke and Pepsi responded by
expanding their offerings, through alliances (e.g. Coke and Nestea),acquisitions (e.g.
Coke and Minute Maid), and internal product innovation (e.g. Pepsi creating Orange
Slice),capturing the value of increasingly popular substitutes internally. Proliferation in

the number of brands did threaten the profitability of bottlers through 1986, as they more
frequent line set-ups, increased capital investment, and development of special
management skills for more complex manufacturing operations and distribution. Bottlers
were able to overcome these operational challenges through consolidation to achieve
economies of scale. Overall, because of the CPs efforts in diversification, however,
substitutes became less of a threat.
Power of Suppliers: The inputs for Coke and Pepsis products were primarily sugar and
packaging. Sugar could be purchased from many sources on the open market, and if sugar
became too expensive, the firms could easily switch to corn syrup, as they did in the early
1980s. So suppliers of nutritive sweeteners did not have much bargaining power against
Coke, Pepsi, or their bottlers. NutraSweet, meanwhile, had recently come off patent in
1992, and the soft drink industry gained another supplier, Holland Sweetener, which
reduced Searles bargaining power and lowering the price of aspartame.
With an abundant supply of inexpensive aluminum in the early 1990s and several can
companies competing for contracts with bottlers, can suppliers had very little supplier
power. Furthermore, Coke and Pepsi effectively further reduced the supplier of can
makers by negotiating on behalf of their bottlers, thereby reducing the number of major
contracts available to two. With more than two companies vying for these contracts,
Coke and Pepsi were able to negotiate extremely favorable agreements. In the plastic
bottle business, again there were more suppliers than major contracts, so direct
negotiation by the CPs was again effective at reducing supplier power.
Power of buyers: The soft drink industry sold to consumers through five principal
channels: food stores, convenience and gas, fountain, vending, and mass merchandisers
(primary part of Other in Cola Wars case).Supermarkets, the principal customer
for soft drink makers, were a highly fragmented industry. The stores counted on soft
drinks to generate consumer traffic, so they needed Coke and Pepsi products. But due to
their tremendous degree of fragmentation (the biggest chain made up 6% of food retail
sales, and the largest chains controlled up to 25% of a region), these stores did not have
much bargaining power. Their only power was control over premium shelf space, which
could be allocated to Coke or Pepsi products. This power did give them some control
over soft drink profitability. Furthermore, consumers expected to pay less through this
channel, so prices were lower, resulting in somewhat lower profitability. National mass
merchandising chains such as Wal-Mart, on the other hand, had much more bargaining
power. While these stores did carry both Coke and Pepsi products, they could negotiate
more effectively due to their scale and the magnitude of their contracts. For this reason,
the mass merchandiser channel was relatively less profitable for soft drink makers. The
least profitable channel for soft drinks, however, was fountain sales. Profitability at these
locations was so abysmal for Coke and Pepsi that they considered this channel paid
sampling. This was because buyers at major fast food chains only needed to stock the
products of one manufacturer, so they could negotiate for optimal pricing. Coke and
Pepsi found these channels important, however, as an avenue to build brand recognition
and loyalty, so they invested in the fountain equipment and cups that were used to serve
their
products at these outlets. As a result, while Coke and Pepsi gained only 5% margins, fast

food chains made 75% gross margin on fountain drinks.

Vending, meanwhile, was the most profitable channel for the soft drink industry.
Essentially there were no buyers to bargain with at these locations, where Coke and Pepsi
bottlers could sell directly to consumers through machines owned by bottlers. Property
owners were paid a sales commission on Coke and Pepsi products sold through machines
on their property, so their incentives were properly aligned with those of the soft drink
makers, and prices remained high. The customer in this case was the consumer, who was
generally limited on thirst quenching alternatives.
The final channel to consider is convenience stores and gas stations. If Mobil or SevenEleven were to negotiate on behalf of its stations, it would be able to exert significant
buyer power in transactions with Coke and Pepsi. Apparently, though, this was not the
nature of the relationship between soft drink producers and this channel, where bottlers
profits were relatively high, at $0.40 per case, in 1993. With this high profitability, it
seems likely that Coke and Pepsi bottlers negotiated directly with convenience store and
gas station owners.
So the only buyers with dominant power were fast food outlets. Although these outlets
captured most of the soft drink profitability in their channel, they accounted for less than
20% of total soft drink sales. Through other markets, however, the industry enjoyed
substantial profitability because of limited buyer power.
Barriers to Entry: It would be nearly impossible for either a new CP or a new bottler to
enter the industry. New CPs would need to overcome the tremendous marketing muscle
and market presence of Coke, Pepsi, and a few others, who had established brand names
that were as much as a century old. Through their DSD practices, these companies had
intimate relationships with their retail channels and would be able to defend their
positions effectively through discounting or other tactics. So, although the CP industry is
not very capital
intensive, other barriers would prevent entry. Entering bottling, meanwhile, would
require substantial capital investment, which would deter entry. Further complicating
entry into this market, existing bottlers had exclusive territories in which to distribute
their products. Regulatory approval of intrabrand exclusive territories, via the Soft Drink
Interbrand Competition Act of 1980, ratified this strategy, making it impossible for new
bottlers to get started in any region where an existing bottler operated, which included
every significant market in the US.
In conclusion, an industry analysis by Porters Five Forces reveals that the soft drink
industry in 1994 was favorable for positive economic profitability, as evidenced in
companies financial outcomes.
2. Compare the economics of the concentrate business to the bottling business. Why
is the profitability so different?
In some ways, the economics of the concentrate business and the bottling business should
be
inextricably linked. The CPs negotiate on behalf of their suppliers, and they are
ultimately dependent on the same customers. Even in the case of materials, such as
aspartame, that are incorporated directly into concentrates, CPs pass along any negotiated

savings directly to their bottlers. Yet the industries are quite different in terms of
profitability. In some ways, the economics of the concentrate business and the bottling
business should be inextricably linked. The CPs negotiate on behalf of their suppliers,
and they are ultimately dependent on the same customers. Even in the case of materials,
such as aspartame, that are incorporated directly into concentrates, CPs pass along any
negotiated savings directly to their bottlers. Yet the industries are quite different in terms
of profitability.
The fundamental difference between CPs and bottlers is added value. The biggest source
of added value for CPs is their proprietary, branded products. Coke has protected its
recipe for over a hundred years as a trade secret, and has gone to great lengths to prevent
others from learning its cola formula. The company even left a billion-person market
(India) to avoid revealing this information. As a result of extended histories and
successful advertising efforts, Coke and Pepsi are respected household names, giving
their products an aura of value that cannot be easily replicated. Also hard to replicate are
Coke and Pepsis sophisticated strategic and operational management practices, another
source of added value.
Bottlers have significantly less added value. Unlike their CP counterparts, they do not
have branded products or unique formulas. Their added value stems from their
relationships with CPs and with their
customers. They have repeatedly negotiated contracts with their customers, with whom
they work on an ongoing basis, and whose idiosyncratic needs are familiar to them.
Through long-term, in depth relationships with their customers, they are able to serve
customers effectively. Through DSD programs, they lower their customers costs,
making it possible for their customers to purchase and sell more product. In this
way, bottlers are able to grow the pie of the soft drink market. Their other source of
profitability is their contract relationships with CPs, which grant them exclusive
territories and share some cost savings. Exclusive territories prevent intrabrand
competition, creating oligopolies at the bottler level, which reduce rivalry and allow
profits. To further build glass houses, as described by Nalebuff and Brandenberger
(Co-opetition, p. 88), for their bottlers, CPs pass along some of their negotiated supply
savings to their bottlers. Coke gives 2/3 of negotiated aspartame savings to its bottlers by
contract, and Pepsi does this in practice. This practice keeps bottlers comfortable enough,
so that they are unlikely to challenge their contracts. Bottlers principal ability is to use
their capital resources effectively. Such operational effectiveness is not a driver of added
value, however, as operational effectiveness is easily replicated.
Between 1986 and 1993, the differences in added value between CPs and bottlers resulted
in a major shift in profitability within the industry. Exhibit 1 demonstrates these dramatic
changes. While industry profitability increased by 11%, CP profits rose by 130% on a per
case basis, from $0.10 to $0.23. During this period, bottler profits actually dropped on a
per case basis by 23%, from $0.35 to 0.27.

One possibility is that product line expansion in defense against new age beverages
helped CPs but hurt bottlers. This would be expected if bottlers per case costs increased
due to the operational challenges and capital costs of producing and distributing broader
product lines. This, however, was not the case; cost of sales per case decreased for both
CPs and bottlers by 27% during this period, mostly due to economies of scale developed
through consolidation. The real difference between the fortunes of CPs and bottlers
through this period, then, is in top line revenues. While CPs were able to charge more for
their products, bottlers faced price pressure, resulting in lower revenues per case.
These per case revenue changes occurred during a period of slowing growth in the
industry, as shown in Exhibit 2. Growth in per capita consumption of soft drinks slowed
to a 1.2% CAGR in the period 1989 to 1993, while case volume growth tapered to 2.3%.
In an struggle to secure limited shelf space with more products and slower overall
growth, bottlers were probably forced to give up more margin on their products. CPs,
meanwhile, could continue increasing the prices for their concentrates with the consumer
price index.Coke had negotiated this flexibility into its Master Bottling Contact in 1986,
and Pepsi had worked price increases based on the CPI into its bottling contracts. So,
while the bottlers faced increasing price pressure in a slowing market, CPs could continue
raising their prices. Despite improvements in per case costs, bottlers could not improve
their profitability as a percent of total sales. As a result, through the period of 1986 to
1993, bottlers did not gain any of the profitability gains enjoyed by CPs.
3. Why have contracts between CPs and bottlers taken the form they have in the
soft drink industry?
Contracts between CPs and bottlers were strategically constructed by the CPs. Although
beneficial to bottlers on the surface, the contracts favored the CPs long-term strategies in
important ways.
First, territorial exclusivity is beneficial to bottlers, as it prevents intrabrand competition,
ensures bargaining power over buyers and establishes barriers to entry. But it is also
beneficial to CPs, who are also not subject to price wars within their own brand. The
contracts also excluded bottlers from producing the flagship products of competitors.
This created monopoly status for the CPs, from the bottler perspective. Each bottler could
only negotiate with one supplier for its premium product. Violation of this stipulation
would result in termination of the contract, which would leave the bottler in a difficult
position.
Historically, contracts were designed hold syrup prices constant into perpetuity, only
influenced by rising prices of sugar. This changed in 1978 and 1986, as contracts were
renegotiated, first to accommodate for rises in the CPI, and then to give general flexibility
to the CP (Coke) in setting prices. Coke could negotiate this more flexible pricing
because its bottlers were dependent on it for business. It further ensured that its bottlers
would be captive to its monopoly status by buying major bottlers and then selling them
into the CCE holding company, which would only produce Coke products. Coke would
capture 49% of the dividends from CCE, without the complications of vertical
integration.

BRAND WARS OF COKE AND PEPSI

Advertising methods
Pepsi began showing people doing blind taste tests called The Pepsi Challenge in which
they preferred one product over the other, and then they began hiring more and more
popular spokespersons to promote their products.
They focused particularly on rock stars; notable soft drink promoters included Michael
Jackson (for Pepsi) and Paula Abdul (for Diet Coke). One example of a heated exchange
that occurred during the Cola Wars was Coca-Cola making a strategic retreat on July 11,
1985, by announcing its plans to bring back the original 'Classic' Coke after recently
introducing New Coke. Pepsi ads often focused on regular people, particularly the young
(and young-at-heart) and those in the future, choosing Pepsi over Coke, supporting
Pepsi's positioning as "The Choice of a New Generation."
In the late-1990s, Pepsi launched its most successful long-term strategy of the Cola Wars,
Pepsi Stuff. Consumers were invited to "Drink Pepsi, Get Stuff" and collect Pepsi Points
on billions of packages and cups. They could redeem the points for free, Pepsi lifestyle
merchandise. After researching and testing the program for over two years to ensure that
it resonated with consumers, Pepsi launched Pepsi Stuff, which was an instant success.
Tens of millions of consumers participated. Pepsi outperformed Coke during the summer
of the Atlanta Olympics - held in Coke's hometown - where Coke was a lead sponsor of
the Games. Due to its success, the program was expanded to include Mountain Dew, and
into Pepsi's international markets worldwide. The company continued to run the program
for many years, continually innovating with new features each year. Source: PROMO
Magazine
The Pepsi Stuff promotion became the subject of a lawsuit. In one of the many
commercials, Pepsi showed a young man in the cockpit of a Harrier Jump Jet. Below ran
the caption "Harrier Jet: 7 million Pepsi Points." There was a mechanism for buying
additional Pepsi Points to complete a Pepsi Stuff order. John Leonard, of Seattle,
Washington, sent in a Pepsi Stuff request with the minimum amount of points and a
check for over $700,000US to make up for the extra points he needed. Pepsi did not
accept the request and Leonard filed suit. The judgment was that a reasonable person
viewing the commercial would realize that Pepsi was not, in fact, offering a Harrier Jet.
In response to the suit, Pepsi added the words "Just Kidding" under the portion of the

commercial featuring the jet (see Leonard v. Pepsico, Inc.).

In 1986, Coca-Cola and Pepsi were launched into space aboard the Space Shuttle in order
to conduct a taste test. The companies had to design special cans for use in zero G
conditions. The experiment was classified a failure by the shuttle crew, primarily due to
the lack of refrigeration and gravity. Coke would later return to space with an improved
delivery system.[citation needed]

Second Cola War

During the 1990s, a "second cola war" was reported in the United Kingdom.[citation
needed] This time it was due to the launch of Virgin Cola, as well as Sainsbury's store
brand Classic Cola, which, unlike most store brand colas, was designed to look like a top
product worthy of competition. For a few years both colas were competitive with CocaCola and Pepsi; at one point Coca-Cola even sued Sainsbury's claiming the design of the
Classic Cola can was too similar to Coke's. However, today, both Virgin and Classic Cola
are far behind the two major brands.

Pepsi's Global Strategizing Following the Cola Wars

As recently as 1990, Pepsi had a proprietary contract with the Indian government, which
allowed it to be a cola provider in India without competition from Coca-Cola. Since then
a paradigm shift has occurred in the Indian government's policies, with domestic
protectionism being replaced by global market competition. The proprietary contract with
Pepsi was relinquished and Coca-Cola was allowed to market its product in India.
Pepsi's experience in other parts of the world parallels its Indian experience. It was
accustomed to enjoying a monopolistic position in Eastern Europe and Latin America as
well. Now, Coca-Cola is selling its product in these areas and giving Pepsi a run for its
money. These global developments necessitated Pepsi's rethinking its strategic
orientation.
The rethinking in practice proved to be very expensive. The strategy developed was to
capture a larger share of the global market through an international expansion
programme. In 1994, Pepsi launched a major offensive in Brazil with a plan to sell more
than 250 million cases a year. In 1996, the company was nearly disgraced in Brazil, when
its bottling company faced insolvency. Meanwhile Pepsi's Venezuelan experience was
also painful, with its bottling company defecting to Coca-Cola around the same time. In
Mexico as well around this time, the company's main bottler was sustaining heavy
operating losses. And in Eastern Europe, it was unable to make much headway because
during the Communist era, it had enjoyed the patronage of Communist leaders. In the
post-Communist era, it had to find its way in foreign cultures entirely on its own. The
same was the case in Latin America. As the region started moving towards market
competition, Pepsi lost its competitive advantage, and had to find its way almost like a
new entrant.
Industry analysts have been highly critical of the strategy Pepsi devised and
operationalized at this time. Its focus was on achieving a boost in sales in the short run,
instead of emphasizing a build-up of brand loyalty. Its strategy was characterized by an

'all or nothing' or 'go for broke' approach. It also employed marketing tactics which may
have served it well in the United States, but which were out of synchrony with cultures of
other countries.
Between 1990 and 1995, Pepsi managed to double its international sales. This however
does not detract from the fact that its strategy was not the best it could have been. In
Brazil during this time, it launched three glitzy marketing campaigns that it subsequently
had to jettison. Its main problem was its inability to develop a network of bottling
partners. The key to marketing success in a country like Brazil, or India, is not publicity
through circus-style advertising gimmicks, but point of purchase appeal. And the latter
requires mastery over a local distribution system.
Despite all this, Pepsi remains a major player on the global scene. Its product quality is
unchallengeable and it employs talented personnel. However, industry analysts do believe
that major problems exist in Pepsi's strategic positioning, and its configuration of various
corporate plans. Underlying all this is a lack of honing of intercultural understanding.
O'Hara-Devereaux and Johansen (1994) recommend that global companies entering into
intercultural strategic engagements be prepared to find 'third ways' of developing vision
plans and strategies. This 'third way' emphasizes the creation of a space where all partners
have equal importance and are prepared to devise new ways of working together. O'HaraDevereaux and Johansen term this the 'collaborative space'. These researchers suggest the
following pointers for the creation of a collaborative space:

The process of creating visions is as important as the vision itself. It enables

managers to bond together, and to understand how the other thinks and functions.
The common strategy developed should be a living tool, capable of constant
adaptation as new realities present themselves.
Top management should be actively involved with the strategizing process, and
set the example in being committed to the creation of a collaborative space.
There should be some ground rules for the conducting of strategy meetings
between the top management teams of all partners. The existence of some
structure for the meetings enables people from all cultures to conduct themselves
appropriately.
There should be database systems for storing information about strategy
formulation and implementation that all partners can access with ease. Sharing of
information is a key to making collaborative spaces viable. Putting all relevant
information on the table allows players to accept or modify strategic plans in an
open environment.

Alterman (2000) has recommended that the feelings of the people concerned be kept in
mind when a decision is taken about the management practices to be used by a strategic
collaboration straddling several cultures. A collaborative arrangement may find it has two
billing systems, for instance. It then has to choose. This might result in employees from
one culture having to use a system that was developed in another culture. They could take

the position that 'our system is better than yours'. Or they could transcend such narrow
perspectives.
Lerpold (2000) recommends the creation of a separate identity for the collaborative
arrangement, even if the arrangement is a temporary one, to solve this problem. This
offsets the complications that arise when several ethnic cultures and at least two
corporate cultures are juxtaposed. Unfortunately, according to Lerpold, global
corporations entering into collaborative arrangements tend to neglect the people aspect.
Instead financial matters are meticulously examined and their implications anticipated.
This was the case with the BP-Statoil strategic venture. The differences between ethnic
and corporate cultures turned out to be greater than anticipated, but initially they were
ignored.
BP is a British corporation, Statoil a Norwegian one. The British perceived the
Norwegians as being passive; the Norwegians felt the British were aggressive. With the
passage of time and the non-resolution of differences, it became necessary to engage in
damage control efforts. These included team-building exercises and cultural sensitivity
training. Simultaneously, an identity was established for the collaborative arrangement.
As the identity took hold, differences started to become less significant. And managers
reported that they felt the work was fulfilling and the intercultural factor was exciting and
invigorating.

COLA WARS