Cola Wars Continue Coke and Pepsi
9-711-462
REV: MAY 26, 2011
DAVID B
YOFFIE
RENEE KIM
Cola Wars Contiinue: Coke
C
an nd Pepsi in 20110 oke and Pepsi vied for “t hroat share” o of the world’ss beverage m market. For more than a century, Co
The most intense battles in the so-called colla wars weree fought over the $74 billio on carbonated soft drink (CSD) industry in the Un nited States.1 In a “carefu ully waged co ompetitive strruggle” that llasted from 1975 through the mid-199
90s, both Cok ke and Pepsi achieved average annual rrevenue grow wth of
2
w
CS
SD consumpttion rose steadily year afteer year. Acco ording around 10%, as both U.S. and worldwide to Rog ger Enrico, former CEO off Pepsi:
The warfare must be perrceived as a continuing c baattle without blood. Witho out Coke, Pep psi would have a tough time beiing an origina al and lively competitor. The more succcessful they are, thee sharper we have to be. If the Coca-C
Cola compan y didn’t exist, we’d pray for someone to invent them. And on the otther side of the t fence, I’ m sure the fo olks at Coke w would say th hat nothing contributes as much to the pressent-day suc cess of the Coca-Cola com mpany than . . .
Peepsi.3
That relationship began to fray f in the early 2000s, ho wever, as U.S
S. per-capita CSD consum mption started to decline. By 2009, the average Ameerican drank 46 gallons of CSDs per year, the lowestt CSD consumption level since 1989.4 At the same time, the t wo companies experienced their own diistinct ups and downs; Coke suffered d several operational setb acks while Pepsi charted a new, aggreessive course in alternative beverages and snack acq quisitions. d into the 21sst century, C oke and Pepsi faced new challenges: C
Could
As the cola wars continued they boost b flagging domestic CSD sales? Ho ow could they y compete in the growing non-CSD cattegory that demanded different bottliing, pricing, and brand sstrategies? What had to b be done to eensure sustainable growth and profitab bility? Economics of the U.S. CSD
C
REV: MAY 26, 2011
DAVID B
YOFFIE
RENEE KIM
Cola Wars Contiinue: Coke
C
an nd Pepsi in 20110 oke and Pepsi vied for “t hroat share” o of the world’ss beverage m market. For more than a century, Co
The most intense battles in the so-called colla wars weree fought over the $74 billio on carbonated soft drink (CSD) industry in the Un nited States.1 In a “carefu ully waged co ompetitive strruggle” that llasted from 1975 through the mid-199
90s, both Cok ke and Pepsi achieved average annual rrevenue grow wth of
2
w
CS
SD consumpttion rose steadily year afteer year. Acco ording around 10%, as both U.S. and worldwide to Rog ger Enrico, former CEO off Pepsi:
The warfare must be perrceived as a continuing c baattle without blood. Witho out Coke, Pep psi would have a tough time beiing an origina al and lively competitor. The more succcessful they are, thee sharper we have to be. If the Coca-C
Cola compan y didn’t exist, we’d pray for someone to invent them. And on the otther side of the t fence, I’ m sure the fo olks at Coke w would say th hat nothing contributes as much to the pressent-day suc cess of the Coca-Cola com mpany than . . .
Peepsi.3
That relationship began to fray f in the early 2000s, ho wever, as U.S
S. per-capita CSD consum mption started to decline. By 2009, the average Ameerican drank 46 gallons of CSDs per year, the lowestt CSD consumption level since 1989.4 At the same time, the t wo companies experienced their own diistinct ups and downs; Coke suffered d several operational setb acks while Pepsi charted a new, aggreessive course in alternative beverages and snack acq quisitions. d into the 21sst century, C oke and Pepsi faced new challenges: C
Could
As the cola wars continued they boost b flagging domestic CSD sales? Ho ow could they y compete in the growing non-CSD cattegory that demanded different bottliing, pricing, and brand sstrategies? What had to b be done to eensure sustainable growth and profitab bility? Economics of the U.S. CSD
C