Soft Drink Industry
The Soft Drink Industry When there is industry there is competition. The bigger the player, the harder they can play. The big players always try to consume many of the small competitors. When they do this they can expand their market share. A perfect example of this is the soft drink industry; Pepsi and Coke have always been archrivals. They are always trying to gain market share, by absorbing many smaller beverage companies to appeal to the public. This paper will discuss the history between these two industry giants and how they financially stand at this point, plus how supply and demand effects this industry. Coca Cola was invented by an Atlanta pharmacist John Pemberton in 1886. His bookkeeper, Frank Robinson, named the product after two ingredients, coca leaves and Kola Nuts. By 1895 the product was available in all 50 states. By 1916 the Company was sold twice, had over 1000 bottlers, and was publicly traded (Dow Jones, Coke). During World War II, the president of Coke Woodruff said, "every soldier will have access to a 5 cent bottle of coke"(Dow Jones, Coke). The company received government aid to build 64 overseas bottling plants during that time. This is how Coke began its ties with many foreign markets. Caleb Bradham, a
Pharmacist from North Carolina, invented Pepsi. He Called it Pepsi Cola because, he claimed it cured Dyspepsia or more commonly known as indigestion. He registered the trademark in 1903. Pepsi tried to follow the same root as Coke by signing up bottlers, by 1923 Pepsi was on its last leg until Loft Candy Company bought it in 1931. It increased its bottle size but kept its 5-cent price. In 1939 it introduced its first radio jingle (Dow Jones, Pepsi). Pepsi had a rough start compared to Coke, and always tried to rise out of the shadow of this industry giant. "According to Coca-Cola Company, the two most famous expressions in the world are ok and Coca-Cola" (Dow Jones, Coke). The world's largest soft drink Company, Coke has more than 160 brands of beverages including carbonated, sports, and milk based drinks, as well as Juices, teas, and, coffees. These products are sold in almost 200 countries (Dow Jones, Coke). "Coca Cola has two of the three top selling soft drinks (#1Coca Cola classic and #3 Diet Coke, #2 is Pepsi Cola) and 44% of the U.S. market share. Sprite is the US's fastest growing major soft drink and Coke classic is king with a 20% share of the market" (Dow Jones, Coke). The way these two giants battle is by trying to pull consumers back and forth between them by releasing new products. Brand Identity is a very strong force in this industry; it takes a long time to develop brand recognition and customer loyalty. Good recognition is opportunity for market share growth. In 1964 Pepsi Acquired Mountain Dew as a new product to attract more consumers. On April 23,1985 Pepsi blew its own horn by stating they won the Cola War. Pepsi felt they won the war because Coke changed its original formula to be more like their drink. Roger Enrico President of Pepsi Said, "It gives me great pleasure to offer Each of you my heartiest congratulations. After 87 years of going eyeball To eyeball, the other guy just blinked. Coca-Cola is withdrawing their product From the market place, and is reformulating Coke to more like Pepsi"(Enrico, 200). The whole Cola war started on Nov 11, 1983 when Coke held a taste test and Pepsi won. This began a huge ad war; the two companies had some real heat going. They had to out do one another. They came out with catchy jingles and celebrities to indorse their products. Coke figured changing the formula would give them a new edge on the war with something new and exciting. Changing the original formula was a huge mistake by Coke because, number one, Pepsi said Coke did this to make their product more like Pepsi. Number 2; new the Coke was not welcomed with open arms by the public. This was a change and it scared the public, because they felt it was a different product and there was no consumer loyalty to it. Coke recognized this very quickly and reintroduced Coca-Cola classic, the original recipe. In 1990 coke introduced PowerAde, to enter the rapidly growing sports drink market, and them introduced Fruitopia in 1994. In 1995
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Approximate Word count = 2000
Approximate Pages = 8 (250 words per page double spaced)
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