The cola industry produced one of the earliest nationwide, mass-produced consumer products that appealed to popular tastes. Driven in part by consistently innovative advertising campaigns, the giants of the industry, Coca-Cola and Pepsi-Cola, grew to become international brands, selling their products throughout the world.
The formula for Coca-Cola (also known as Coke) was created by John Stith
The Pepsi-Cola company (which became PepsiCo in 1965 when it merged with Frito-Lay) also had ordinary beginnings, as Caleb Bradham, a North Carolina druggist, developed a formula for what would become a sweeter soft drink in 1898. Pepsi-Cola (also known as Pepsi) became a perennial also-ran to Coca-Cola, until Depression-era cost-cutting led to the development of the twelve-ounce bottle, which gave consumers of Pepsi more product for the same price as the much smaller Coca-Cola. Suddenly, impoverished consumers had a cheaper version of their favorite beverage, and Pepsi-Cola challenged Coca-Cola’s supremacy during the postwar era.
PepsiCo used several tactics to seize market share from Coca-Cola.
Preparing to celebrate a century of Coca-Cola, the company embarked on one of the worst public relations disasters in corporate history, reformulating Coca-Cola from the original recipe. Intended to recharge the Coca-Cola brand and defeat the challenge from Pepsi-Cola, New Coke instead energized a consumer revolt against the new formula. For months, fans of the original formula collected the old Coca-Cola under the assumption that it would run out, then they began a media campaign to convince the company to return to the original formula. With its new formula under attack, the company relented, selling New Coke alongside the original formula drink, which it renamed Coca-Cola Classic. Eventually New Coke would disappear from the shelves, ending the brief and disastrous attempt to change an icon.
Getting the product to customers is important for increasing market share. This Pepsi-Cola truck delivered the company’s beverages to restaurants in 1943.
The rivalry between Coca-Cola and PepsiCo moved from the companies’ main products to their subsidiary ones; both corporations purchased or developed competing brands of bottled water, teas, and sports drinks such as Gatorade and Powerade. Old products, such as vanilla-flavored or cherry colas, were reintroduced and repackaged for a generation that had not known them. PepsiCo went a step further by expanding into the fast-food business, purchasing Pizza Hut (1977), Taco Bell (1978), and Kentucky Fried Chicken (1986; later KFC), and using these chains’ thousands of outlets to sell PepsiCo products, thus creating a permanent market for Pepsi-Cola and its other soft drinks. In 1997, PepsiCo spun off these fast-food restaurants, creating Tricon Global Restaurants, which in 2002 acquired Long John Silver’s and A&W Restaurants and became Yum! Brands.
A third major competitor in the cola wars entered the market in 1905.
In 1994, British billionaire Richard Branson challenged Pepsi-Cola and Coca-Cola, introducing his Virgin Cola into the English market, and at the turn of the century he sought to invade the American market. Unfortunately for Branson, his plans fizzled: Virgin Cola was unable to grasp a foothold in the United States, even with Branson’s billions backing it. Because of this, few new colas are offered nationally, although supermarkets routinely carry regional products, such as Jones Soda, or discount colas under the stores’ own logos.
Allen, Frederick. Secret Formula. New York: HarperBusiness, 1995. Highlights the development and growth of the Coca-Cola Company. Hays, Constance. The Real Thing. New York: Random House, 2004. Recounting of the rise of Coca-Cola and its battle with PepsiCo and other soft drink companies. Pendergrast, Mark. For God, Country, and Coca-Cola. New York: Basic Books, 2000. Explains how Coca-Cola and PepsiCo have battled for loyalty of consumers. Rothacher, Albrecht. Corporate Cultures and Global Brands. Hackensack, N.J.: World Scientific, 2004. Examines how international brands of products have spread across the world and includes discussion of the Coca-Cola and PepsiCo companies.