A brief presentation on case study Cola Wars where we try to analyse the past history and predict the future of their business and growth opportunities from a Marketing Management Perspective.

1. Case Study Analysis on
Cola Wars Continue : Coke and
Pepsi in 2010
Presented by :
Mohan Kanni
Dhanunjay Naidu Thentu
Vivek Lalam

2. History Of Coca-Cola
• Coca-Cola was formulated in 1886 by John Pemberton (pharmacist).
• It was served at Jacobs Pharmacy.
• Frank Robinson named it as Coca-Cola.
• In 1891, Asa Candler acquired the formula of Coca-Cola.
• In 1919 Company was sold to a group of investors and four years later, Robert
Woodruff became the Leader.

3. History Of Pepsi-Cola
• Pepsi-Cola was invented in 1893 by Caleb Bradham (Pharmacist).
• During the Great depression (1929-1939),Pepsi lowered the price to a nickel.
• PepsiCo was established through the merger of Pepsi-Cola and Frito-Lay in 1965.

4. Cola Wars
• In 1959, Alfred Steele became CEO of
Pepsi and his motto was “Beat Coke”.
• To target family consumption through
supermarkets.
• In 1970, marketing campaign “Pepsi
Generation” was launched.
• In late 1950’s, Coca-Cola advertised
as “Americans Preferred Taste”
• Other Advertisements included “No
Wonder Coke Refreshes Best”

5. Cola Wars
• Pepsi launched Teem (1960),
Mountain Dew (1964) and Diet Pepsi
(1964).
Non CSD
Pepsi merged with Frito-lay
• Coke launched Fanta (1960), Sprite
(1961) and Cola Tab (1963).
Non CSD
Coke purchased Minute maid, Duncan
foods and Belmont Springs Water.

6. The Pepsi Challenge
• In 1974 Pepsi launched “Pepsi
Challenge” in Dallas.
• Blind taste tests.
• Coke countered with rebates, retail
price cuts.

7. Cola Wars Heat Up
• Pepsi doubled its advertising
expenses.
• Pepsi introduced Lemon-Lime
Slice (1984) and Caffeine Free
Pepsi (1987)
• In 1980 Coke switched from sugar to
high-fructose corn syrup.
• Doubled the advertising expenses.
• Diet Coke was introduced in 1982.
• Coke introduced Caffeine Free Coke
(1983) and Cherry Coke (1985)

8. PRODUCTION AND DISTRIBUTION
• CONCENTRATE PRODUCERS : The concentrate producer blended raw material
ingredients, packaged the mixture in plastic canisters and shipped those
containers to bottler.
• BOTTLERS : Bottlers purchased concentrate ,added carbonated water and high-
fructose corn syrup, bottled and canned the resulting CSD product to the
consumers.

9. • RETAIL CHANNELS :The distribution of CSD’S took place through Super Markets,
Fountain Outlets, Vending Machines, Mass merchandizers, Convienience stores
and gas stations and other outlets.
• SUPPLIERS to concentrate producers and Bottlers :
 Concentrate producers required inputs like
caramel colouring, phosphoric or citric acid, natural flavours and caffeine.
 Bottlers purchased two major inputs : Packaging (including cans, plastic bottles
and glass bottles)
Sweeteners (including high fructose corn syrup, sugar and artificial sweeteners
such as aspartame)

10. • The Franchised bottler owned a manufacturing and sales operation in an
exclusive geographical territory, with rights granted in and other terms of sale by
the franchiser.
• The 1987 Master Bottler contract granted coke the right to determine the
concentrate price.
• Under this contract coke could assist bottlers with advertising or marketing
• In case of Pepsi, the agreement granted the bottler perpetual rights to distribute
Pepsis CSD products but required it to purchase raw materials from pepsi at
prices determined by Pepsi.

11. SWOT Analysis
Weakness
Threats
Strengths
Opportunities
Most Valuable Brand for 13 years
 Worlds largest in beverages : $15 Billion
 Diversification:500+brands;200 countries
 Extensive Global Dist. Network
 Leader in Fountain Accounts
 Strong in emerging markets : China, Brazil, Eastern
Europe
 Declining market share since 2000
 Negative publicity
 CSD focus : only32% non-CSD share
 Price Pressure from mass retailers(Wal-Mart):40% of
US packaged sales
 Expand non CSD Products
 Expand and Mostly CSD line ;Sprite Green(coke)
 Global Expansion in emerging markets: India ,China,
Brazil(coke)
 Innovative Offerings tailored to local taxes
 Growing "health-conscience" society
 Changing Consumer tastes and preferences
 PepsiCo’s Gatorade, Tropicana and Aquafina are stronger
brands
 Boycott in the Middle East
 Protest against Coke in India
 Negative publicity in Western Europe

12. SWOT Analysis
Weakness
Threats
Strengths
Opportunities
 22nd Most Valuable Brand
 2nd Largest in F & B in world : $22 Billion
 Leader in Non CSD
 Diversification : “The power of One”
 Extensive Global Dist. Network
 Successful marketing Campaigns and celebrity
endorsements.
 Declining market share in beverages
 Negative publicity
 Overdependence on US markets ; 50%of total sales
 Low market share in fountain accounts: 20% vs Coke's 69%
 Price pressure from mass retailers: 12% of revenue(Wal
mart)
 Expand non CSD juice sport energy bottled water
 Gatorade, Naked(Pepsi)
 Expand and Mostly CSD line ;Pepsi Next,Trop50(Pepsi)
 Global Expansion in emerging markets: India ,China &
Russia(Pepsi)
 Innovative Offerings tailored to local taxes
 Herb drinks (Pepsi)
 Growing nutritious snacks product markets
 Obesity and Health Concerns
 Changing Consumer tastes and preferences
 Coca-Cola Increases Marketing and Innovation Spending to
$400M Globally
 Relying on North America only is Bad
 Decline in Demand for Carbonated Drinks.
 Negative publicity during 2003 World cup incident of Pepsi
Blue.

13. BCG Matrix – Coca Cola
Thumbs up
Kinley
Limca
Fanta
Coca Cola
Diet Coke
Gold
Spot(India)
Root Beer
Sprite
Maaza
Minute
maid

14. BCG Matrix - Pepsi
Aquafina
Miranda
Mountain
Dew
Pepsi
Diet Pepsi
7 UP
Tropicana
Pepsi Max
Pepsi Blue, Pepsi Gold
Mist Twist

15. Bottler Consolidation and Spin-Off
• Coke started refranchise bottling operation by buying up poorly managed
bottlers, infusing them with capital and quickly reselling them to better
performing bottlers.
• Coke created an independent bottling subsidiary called Coca-Cola Enterprises.
• Pepsi did the same through Pepsi Bottling Group.

16. The Quest for Alternatives
• Pepsi replaced high fructose corn syrup with natural sugar.
• Coke and Pepsi both developed their own versions of Stevia (herb with zero
calorie sweetener).
• Pepsi developed non-CSD products like Gatorade and Tea based drinks (Lipton).
• Coke acquired maker of Vitamin water drinks and also entered business of
supplying coffee and tea to food service customers.

17. Internationalizing the Beverage Wars
• India and China emerged as future battlegrounds.
• Coke relied on International market (80% of sales)
• Pepsi chose to focus on emerging markets

18. Who has been wining the war?
1950: Coke have 47% and Pepsi have 10%
1970: Coke have 35% and Pepsi have 29%
1990: Coke have 41% and Pepsi have 32%
2000:Coke have 44%Pepsi have31.4% other beverage Cadbury Schweppes 14.7%
2006:Coke have 43.1% Pepsi have 31.7% Cadbury Schweppes 14.5%