Başak Özkan
March 29, 2021
The best way to understand the legendary rivalry between Pepsi and Coca-Cola is to dive into the story. I take a look at how these two soft drink giants have competed, failed, succeeded and evolved over the years.
The best way to understand the legendary rivalry between Pepsi and Coca-Cola is to dive into the story. I take a look at how these two soft drink giants have competed, failed, succeeded and evolved over the years.
We go back to 1886 when the pharmacist named John S. Pemberton created Coca-Cola that was in medicine bottles at the time. Another pharmacist in North Carolina named Caleb Bradham introduced what was first called “Brad's Drink” in 1893 and later (1898) officially became Pepsi.
By the time Pepsi came into being, its rival (Coca-Cola) was already selling over one million gallons of its product per year. In 1900, singer and actress Hilda Clark was already featured in the ads and later several celebrities including several top athletes.
By 1910, Pepsi had several franchises in 24 states and sold approximately 100,000 gallons of Coke a year. Coca-Cola was the first of the two to cross borders. They opened a factory in the Philippines in 1915. By the time the “Roaring Twenties” came, Coca-Cola also settled in Europe and later to Australia and South Africa.
The whole battle between Coca-Cola and Pepsi almost came to a standstill in 1923. World War I sugar rationing forced Pepsi to go bankrupt. About five years later, they were sold and moved to Virginia. After a second bankruptcy in the early 1930s, things began to change. Pepsi found success through emphasizing value and affordability. Their bottles were five cents each.
Both Coca-Cola and Pepsi have carefully considered the colors and logo associated with their brand.
Pepsi's first logo had a typeface that was difficult to read. This was modified and the logo that most people associate with this drink debuted in the 1940s during World War II. They chose a red, white and blue color combination to ride on the strong patriotism that prevailed.
The familiar red color of Coca-Cola first appeared in the late 1940s as a background for the white letters. The company used this combination in all its ads to increase brand awareness and recognition. It was the accountant who designed the brand's famous script logo at the end of the 19th century. The contour bottle debuted in 1915.
During the early years of the Coke-Pepsi War, Coke had an advantage thanks to a series of memorable and impressive ads. However, Pepsi came back nicely with the 1939 debut of the ad jingle “Nickel Nickel”. More than one million copies were played daily via the jukeboxes in restaurants.
When the war ended, the company felt its marketing presence was strong enough to warrant a price increase. Around the same time, Pepsi started selling its canned beverages.
Coca-Cola quickly took advantage of the rising power of television in the 1950s. On Thanksgiving Day, 1950, the company aired a half-hour commercial on CBS. The company also released its own radio-friendly tune called “Coke Time” in 1953.
Meanwhile, Pepsi decided to make it more of a lifestyle brand. This shift in strategy was reflected in Pepsi's TV ads in the 1950s. They often had well-dressed couples/families in elegant environments.
To further emphasize this elegance, the company introduced a swirl bottle in the late 1950s. This was accompanied by a successful “Be Sociable, Have a Pepsi” campaign that combined TV ads with radio and print ads.
By the 1960s, both Coca-Cola and Pepsi were distributed in over a hundred countries around the world. Both companies have started producing various products in addition to cola.
Coca-Cola's big move was to purchase the Minute Maid Corporation in 1960. Sprite, the company's most successful spin-off product, was launched in 1961. Pepsi would later acquire the international distribution rights to 7-Up, Sprite's competitor, although Dr. Pepper holds the U.S. rights.
In 1964, Pepsi gave its health-conscious customers a sugar-free option with Diet Pepsi. Coca-Cola responded with the launch of Fresco, a grapefruit and citrus soft drink, in 1965. Diet Coca-Cola did not enter the market until 1982.
Pepsi itself made an important purchase in the 1960s; the company merged with Frito-Lay to form PepsiCo. The company used this newly formed partnership to give cola lovers a perfect companion — Doritos! PepsiCo also started the “Pepsi Generation”, referring to younger drink consumers.
Although Pepsi has largely focused on supplementing the range with its range of snacks, such as: Lays, Ruffles, Cracker Jack, Quaker and Rice-A-Roni, Coca-Cola is ultimately the winner with more than 15 brands.
Coca-Cola humiliated themselves in 1985 when they decided to change the classic formula and debuted with New Coke. The massive public backlash resulted in the rapid return of the company's original, beloved formula. While this was a major PR disaster for Coca-Cola, the company was able to get by with its marketing mess.
Another marketing tactic that both companies have used successfully over the years is product placement. The most obvious example of this is the movie “One, Two, Three” (1961), where James Cagney plays a manager at the Coca-Cola Company. However, Coca-Cola's first movie appearance is the 1946 Christmas classic “It's a Wonderful Life”. Both movies are recommended to watch! Coca-Cola products have been increasingly featured in movies since then, even opening an office in Los Angeles to ensure the authenticity of the brand's representation.
In the early 1980s, both Coca-Cola and Pepsi wanted to attract as many celebrities as possible to their brand. Hence the reference to “rock & roller cola wars” by Billy Joel in his late '80s hit. Pepsi made a series of successful ads with Michael J. Fox, Shakira, Beyonce, Michael Jackson and many other big names.
Coca-Cola has also partnered with quite a few global celebrities. To name a few: Whitney Houston, Paula Abdul & Elton John, Will i.Am, Maroon 5, and Selena Gomez. Still, Pepsi comes out on top with celebrity endorsements.
Not surprisingly, Coca-Cola and Pepsi both became very active online, especially when social media marketing was launched. Both companies have their share of online highs and lows. But when it comes to online engagement, Coca-Cola is the big winner among Facebook fans and Twitter followers.
Let's wrap up this roundup of Coca-Cola vs. Pepsi by comparing some key data. The bottom line is that both companies have seen their revenues increase since the 1980s.
Because Coca-Cola has mainly focused on drinks and Pepsi has made a very lucrative foray into the snack food industry, Pepsi has a slight advantage with inventory values. In addition, Coca-Cola earns approximately $35 billion in revenue annually, while Pepsi generates nearly $60 billion annually. Again, largely as a result of an expansion outside the beverage market.
Coca-Cola actually spends more on advertising than Pepsi. This probably explains why Coca-Cola outperforms Pepsi with a market share of around 10 percent. Such numbers seem to suggest that Coca-Cola is the winner. However, this isn't necessarily the case, as both companies have different marketing goals and different definitions of what “success” means. This is also a reminder that marketing decisions for each company or brand should be driven by clearly set goals.
Even if you're not really in a battle with the competitor, there are plenty of lessons to be learned from this battle. First of all: understand your market and target group. Then, see what your competitors are doing and do better. Third, find smart ways to create new niches for your organization. Last but not least: Know where the consumer's needs lie.
Of course, quality and content are just as essential as marketing. So, here's the final lesson: It's not always about winning the marketing war with rivals to reap the rewards. After all, both Coca-Cola and Pepsi are the two most recognized beverage brands in the world.
