Cola Wars Essay

Submitted By fine_kay10

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For more than a century, Coke and Pepsi have been the two popular companies in competition of the world’s beverage market. “The most intense battles in the so-called cola wars were fought over the $74 billion carbonated soft drink (CSD) industry in the United States.” Although still in the lead, recent sales of CSD have declined. For years, the rivalry between Cola and Pepsi has provided a competitive advantage for both parties, motivating each to do whatever is necessary to stay on top.

John Pemberton, a pharmacist in Atlanta, Georgia formulated Coca-Cola in 1886. In 1891, Asa Candler gained knowledge of the formula and began brand advertising. The company’s bottling network grew rapidly, reaching 370 franchisees by 1910. Coke was the first concentrate producer to build a nationwide franchised bottling network. “By 2009, 92% of Coke’s U.S. concentrate sales for bottled and canned beverages were covered by its 1987 Master Bottler Contract.” This granted Coke the right to establish concentrate price and other terms of sale allowing the company to save money because they no longer had to pay bottlers for advertising or marketing. However, the company decided to make large investments and support its bottling company. In terms of bargaining for the right of suppliers, I rate this high because they are still receiving product without being forced to lose money by paying for it.

After Pepsi entered the fast-food restaurant business in 1978, Coca-Cola followed suit acquiring bigger restaurants (by sales) such as McDonalds and Subway. Although in the late 1990s, the soft drink industry began to diminish, CSD’s were still the highest consumed beverage by Americans giving Cola a chance to continue to grow. Challenges arose due to obesity and health nutrition. In 2005 new federal nutrition guidelines stated CSDs were the largest contribution to obesity-causing sugars in the American diet, forcing schools to ban all soft drinks on the premises.

A great strategy of Coke is to place great emphasis on promoting its brand, such as spending $230 million in advertising for its flagship

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