Cola War
rP os t
9-709-451
REV: SEPTEMBER 30, 2009
FRANK V. CESPEDES
Cola Wars: Goin Global ng op yo By 2008, per capita consumption of carbonated soft drinks (CSDs) in the United States had declined in seven of the past ei ht years. Annual consumption of CSDs was 740 eight-ounce drinks ig per person in the U.S. versus 288 in the rest of the developed world and 77 in developing countries.1
As a result, the Coca-Cola Co. (Coke) and PepsiCo (Pepsi) increasingly looked abroad for growth.
Coke and Pepsi approached international CSD markets from different positions and heritages.
Coke was “global when global wasn’t cool,” noted a CEO of Coca-Cola.2 Coke’s global expansion began in 1906 when it entered Cuba, Panama, and Canada. The company proved adept at developing markets where CSD consumption was low but potential was large. For example, in 1993 a Coke executive noted that Indonesia had 200 million inhabitants, a median age of 18, annual per capita consumption of 9 eight-ounce cans of soda, and “they sit squarely on the equator. It’s soft drink heaven.”3 Ten years later, per capita consumption in Indonesia was up 55%, and Coke had 75% of the market versus 5% for Pepsi.4 B 2008, Coke was available in more than 200 countries, and non-U.S.
By
volume accounted for more than 70% of Coke’s sales and profits.
No
tC
Pepsi, struggling financially in the first half of the 20th century, expanded beyond the U.S. more n o slowly than Coke. Its periodic attempts to attack international Coke strongholds had met with relatively little success for decades. For some time, Pepsi pursued a strategy in its non-U.S. soft drink business that a former president of Pepsi International described in 1991 as “schizophrenic”;5 in many markets it focused on niche positions (for example, targeting big cities in Latin America) while movin more broadly into markets where Coke had been excluded by governments (e.g., Saudi ng Arabia and the former Soviet
9-709-451
REV: SEPTEMBER 30, 2009
FRANK V. CESPEDES
Cola Wars: Goin Global ng op yo By 2008, per capita consumption of carbonated soft drinks (CSDs) in the United States had declined in seven of the past ei ht years. Annual consumption of CSDs was 740 eight-ounce drinks ig per person in the U.S. versus 288 in the rest of the developed world and 77 in developing countries.1
As a result, the Coca-Cola Co. (Coke) and PepsiCo (Pepsi) increasingly looked abroad for growth.
Coke and Pepsi approached international CSD markets from different positions and heritages.
Coke was “global when global wasn’t cool,” noted a CEO of Coca-Cola.2 Coke’s global expansion began in 1906 when it entered Cuba, Panama, and Canada. The company proved adept at developing markets where CSD consumption was low but potential was large. For example, in 1993 a Coke executive noted that Indonesia had 200 million inhabitants, a median age of 18, annual per capita consumption of 9 eight-ounce cans of soda, and “they sit squarely on the equator. It’s soft drink heaven.”3 Ten years later, per capita consumption in Indonesia was up 55%, and Coke had 75% of the market versus 5% for Pepsi.4 B 2008, Coke was available in more than 200 countries, and non-U.S.
By
volume accounted for more than 70% of Coke’s sales and profits.
No
tC
Pepsi, struggling financially in the first half of the 20th century, expanded beyond the U.S. more n o slowly than Coke. Its periodic attempts to attack international Coke strongholds had met with relatively little success for decades. For some time, Pepsi pursued a strategy in its non-U.S. soft drink business that a former president of Pepsi International described in 1991 as “schizophrenic”;5 in many markets it focused on niche positions (for example, targeting big cities in Latin America) while movin more broadly into markets where Coke had been excluded by governments (e.g., Saudi ng Arabia and the former Soviet