Pepsi vs Coke: The Incredible Story Behind The Cola Wars
[Sound of commercial]
Pepsi or Coke? We’re a hundred percent sure that
this isn’t the first time you’ve been asked this question.
After all, the rivalry between two of the most popular sodas in the world
has existed for over decades now.
While both Pepsi and Coke might look similar and even taste similar to some,
both the beverages have extremely loyal fan bases that beg to differ.
In fact, not only the fans, but the companies themselves have been at odds with each other
since the 80s’, with both of them trying to out-do the other every step of the way.
But how exactly did this ‘cola war’ between Pepsi and Coke start?
And how has it managed to go on for so long without a clear winner?
Let’s find out!
[Chapter 1:] The Early Days
To understand why Pepsi and Coke have been in a long-term battle for so long,
let us take you back to 1886 when the world first saw what went on
to become one of the world’s most loved sodas, Coca Cola.
The drink was invented by a pharmacist in Columbus who sold it off
to soda fountains when he saw how popular the drink was getting.
And we kid you not, but the earliest formulas of Coke
actually involved small amounts of cocaine, hence the name Coca cola.
But of course, that clearly did not last for long.
Six years later, the company ‘Coca Cola’ came into being.
Now, Coca cola suddenly started gaining a lot of attention within the masses.
It was a cola unlike any other.
[Chapter 2:] The Beginning
Back in 1893, before Coke even existed, another pharmacist in North Carolina called
Caleb Bradham formulated his own drink which he named ‘Brad’s Drink’.
Seeing Coca Cola’s popularity, Bradham decided to change his soda’s name to ‘Pepsi-Cola’
and founded the Pepsi-Cola company in 1902.
This marked the beginning of the war between these two iconic drinks.
However, from the 80s’, all the way into the early 90’s,
it was apparent that Coke was the more popular soda.
Coca Cola as a company made smart business decisions,
specially with their 1931 Christmas campaign, which marketed Coke as the soda
you could drink all year round, skyrocketing their sales.
Meanwhile, Pepsi was struggling financially because of the competition with Coke.
However, everything changed for Pepsi with a small change in leadership.
[Chapter 3:] Pepsi Takes Over
While Coke dominated the market in the early 90’s,
Pepsi took over in 1975 with it’s brilliant campaign ‘The Pepsi Challenge’.
At the time, the company was under the charge of Donald M Kendall,
who was at the forefront of this ‘cola-war’, doing everything he could to elevate Pepsi as a brand.
Right before putting The Pepsi Challenge into action,
Kendall actually merged Pepsi with the snack company Frito lay,
to market Pepsi as a ‘snack’ with companions like Lays and Doritos,
tempting people to buy the combos.
Not just this, but he also acquired partnerships with food chains like KFC,
Pizza Hut and Taco Bell to ensure that these brands didn’t stock Coke at all.
Despite all of this, a lot of people blamed Pepsi for stealing Coke’s formula,
the drink was subjected to a lot of backlash first.
With the Pepsi Challenge, the company asked people to take part in a blind taste test
to see which drink they liked better.
Surprisingly, more than 90% of the people chose Pepsi in the taste tests,
which were then turned into an ad and broadcasted nationally and internationally.
>>[Pepsi Commercial]: "This is the taste,
this is the test.
Pepsi vs. Coke, the Pepsi challenge.
And all across America, more people take Pepsi,
time, after time, after time...
Pepsi Cola!"
This wasn’t just a gimmick, but actual public opinion,
which gave Pepsi the edge it needed in the market.
But of course, Pepsi still had a long way to go to beat Coke in terms of sales.
But of course, the campaign helped boost Pepsi’s image and shares by a considerable amount.
Under Donald’s watch, the company’s annual revenue grew to $7.6 billion from $200 million,
giving Coke quite the competition.
[Chapter 3:] Coke Fights Back and Cola Wars Round 2
Now you don’t think Coke just took all of this without any retaliation, did you?
The company responded back by delving into territory that Pepsi hadn’t.
The makers of coke came up with a diet recipe in 1982 and the year after that,
they released caffeine free versions of Coke and Diet Coke.
The drink now catered to people who wanted a sweet treat,
without damaging their arteries in the process.
The strategy was a hit and Coke once again took over the Soda market with careful strategizing.
CEO Roberto Goizueta also got the company to use corn syrup instead of sugar
to reduce the cost of production.
However, with the use of corn syrup, in 1985 Coke announced
that they were switching up their original recipe.
The drink was called ‘The New Coke’ and it attempted to be a little sweeter,
similar to Pepsi.
As great as this idea was, boy, did it backfire.
No one seemed to want a newer version of Coke
because loyal fans were pretty happy with the original one.
Of course, this was the perfect time for Pepsi to take advantage of the situation.
With Donald still in charge, Pepsi kickstarted celebrity ad campaigns,
with huge names like Michael Jackson as brand ambassadors.
Not just that, but Pepsi also bought the international division of 7up,
earning an edge in the Soda market.
Around 1987, stars like David Bowie and Tina Turner did ads for the soda,
elevating its success even further.
And as if that wasn’t enough, Madonna was named the spokeswoman for Pepsi in 1989,
which clearly established Pepsi as the ‘it-drink’.
At the same time, Coke still didn’t want to give up on their ‘New Coke’ idea.
Because of which, tons of people speculated that Coke might die out as a brand
because of their unwillingness to listen to their customers.
However, in the 1990s, Pepsi started losing fans and relevance
because of certain health violations, when people found actual syringes in Pepsi Cans.
>>[News Speaker]: "It's been reported that people in 24 states now claim to
have discovered foreign objects in Pepsi cans,
everything from needles to bullets has shown up..."
The incidents sparked insane panic among people and they started returning back to Coke.
In 1996, Pepsi officially lost the Cola war with Coke’s profits beating those of Pepsi by 47%.
With steady marketing and celebrity endorsements, Coke was winning the race by a huge margin.
The CEO of Coca Cola at the point, Roberto Goizueta even made a statement saying
that he didn’t even consider Pepsi competition
because the drink was obviously seeing a huge decline.
[Chapter 4:] Cola War in the 2000s and the Future
Of course, the Cola war never really ended.
In the 2000s, America suddenly decided to cut back on sugar, as a country.
This meant that Coke and other soft drinks saw a decrease in their sales whereas Pepsi played
it smart and the company’s bottled water earned it huge profits during this ‘anti-obesity’ era.
But by the 2010’s era, Coke was still winning in terms of shares and profits.
Despite Pepsi’s use of celebrities to endorse itself as a drink,
Coke was still the beverage of choice for the masses.
TV shows, Movies and events like the Super Bowl, all featured Coke as the default beverage,
which obviously was a disadvantage for Pepsi.
In February 2012, PepsiCo announced it was cutting 8,700 jobs, or about 3 percent of its workforce.
In an ill-timed move,
it also announced that it would increase its marketing budget by $600 million.
Despite that, the turnover for the brand remained considerably less than Coke
and the situation has remained the same for quite a while now.
As of 2020, the two drinks have seen steady revenue spikes.
In numbers, Coke actually out-spends Pepsi on advertising ($2 billion to $1.1 billion),
which might be why Coke is currently at a 10% higher standing in the stock market,
earning itself more impactful brand deals and endorsements.
But when it comes to stock value, because of Pepsi’s image as a snack more than a beverage,
the company generates 60 billion USD in revenue, while Coke generates a mere 35 billion USD.
So, it’s really difficult to say which cola is the ‘winner’
when it comes to this long-lasting battle.
In terms of taste, some people prefer Pepsi while
some people would do anything for a chilled can of Coke.
What it comes down to is marketing.
Through rigorous marketing,
Pepsi managed to overtake a company as successful as Coke in the 1900s, which was no small feat.
Since then, the battle that has ensued between these two drinks
has relied on ad campaigns rather than anything else.
When it comes to social media, Coke takes the lead
with its 107 million likes on Facebook as compared to Pepsi’s 37.7 million.
With the rise of social media, it’ll be interesting to see
what new marketing campaigns the two entities come up with
and whether any one of the two colas will actually win this never-ending ‘cola war’.
But as for now, it seems like all we can do is wait it out.
That's a wrap for this video.
Which of these two cola brands is your favourite?
Let us know in the comments below.
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See you in the next one! [Planet Biz]