COLA WARS CONTINUES: COKE AND

PEPSI 2006

Presented By
Aniruddha Deshpande 15P006
Pankaj Sharma 15P036
Saurin Shah15P048
Surbhi Jain15P053
Vishal Mehta15P056
Yashas Gupta 15P060

Why this ColaPepsi Di?

Facts of the case

CSD- $60 billion-US/

Cocentrate Manufacturing Process Low Capital Investment
Bottler Manufacturing Process High Capital Investment
Coke First Concentrate Producer to build nationwide franchised botting
network; Pepsi followed
Historically, Pepsi targeted Retail Chains and Coke targeted fountain
chains
Bottler Consolidation

Quest for alternatives Non CSD

Coca Cola Enterprises

Pepsi Bottling Group
Pepsi: Gatorade, Lipton, Tropicana
Coke: PowerAde, Nestea, Minute Maid

Challenges to enter International market - Antitrust Regulations, Price

Controls, Advertising Restrictions, Foreign Exchange Controls, Lack of
Infrastructure, Cultural Differences, Political Instability and Local
Competition

Market Share by volume

50
44.1

45
41.1
40

Market Share by Case Volume(percent)

35
33.4
30

35.3

39.5

35.9
32.4

34.7

30.9

30.3

31.4

31.7

27.8

25
20
20.4

43.1
42.3

19.8

Coca-cola Company
PepsiCo, Inc.

21.1

15
10
5
0
1966

1970

1975

1980

1985

Year

1990

1995

2000

2004

Change in consumption
pattern
180
160
140
120
100

Consumption (Gallon/capita)

CSD
Bottled water
Total consumption of drink in
U.S.

80
60
40
20
0

Year

Net profit/ sales

25

20

15

Net Profit/Sales

Coca-cola Company
PepsiCo, Inc.

10

0
1975 1980 1985 1990 1995 2000 2001 2002 2003 2004

Year

Worldwide CSD Consumption (2003)

15.04
34.5

12.21

Europe
Latin America

12.21

Asia Pacific
26.06

Afric
North America

Coca Cola:Timeline
First bottling
franchisee

1886

Under Woodruff:
Lifestyle Advertising
Open top coolers
and fountain
dispensers

1899
1960

Coke
formulated
Candler sold the
company and it
became public
clients

1919
1980

Cokes share
45%
Pepsis
share10%

1925

Focus on international
business during by
engagement with US
Army

From sugar to fructose corn

syrup
Doubled marketing expense
Sold off non CSD business

1942

Diversified into
Fanta, Sprite, Minute
Maid, Duncan Foods

1950

Coca Cola:Timeline
Failed Effort:
Change in the 99
year old formula

1982

Extension
mother
coke: Diet
Coke

1985
2004

10 Brands
17 Containers

Discrimination suits
Currency Crises
Mass Recall
Layoffs

1986

Created Coca Cola

Enterprises

1987

Alternative CSDs: Diet Coke

and Coca Cola Zero

1996

2005

Long Term Shift:

Decline in
consumption

Just 4.2 % growth

from 1996

1997

SWOT - COKE
Weaknesses
1. Rigid Mindset
2. Obsessed with self
3. Less support to Bottlers

1. Initiator in market
2. Innovative Ideas

Strengths

COKE
Opportunities
1. Pepsis quick response to
competition
2. Retail Chains such as Wal-Mart

Threat

1. Cost of Product
2. Execution

Pepsi:Timeline
Pepsi faced
bankruptcy

1893
1964

Coke files suit against Pepsi,

Pepsi wins in 1941, Pepsi
enters European market after
WW2
Cokes share 45%, Pepsis
share10%

1923,1932

Pepsi
formulated
Pepsi lowered price
Twice as much for
a nickel too

1938
1974

Pepsi narrowed
cokes lead to 21, youth
targeting

1950

Under Alfred Steel as

CEO, Pepsi focused on
take home sales in
supermarket

Blind Taste Challenge, Dallas

Texas

1963

Diversified into
Mountain Dew, diet
Pepsi, Teem

Pepsi:Timeline
>10 brands & 17
container types

1979

Surpassed
coke in food
store sales

10 Brands
17 Containers
Surpassed sales of Coke in Non
CSD categoru

1990
2005

PBG went public

1987

Long Term Shift:

Decline in
consumption

1996

Diet Pepsi as
flagship brand, shift
with Nutrition
guidelines

2001

Threat
1. Presence of Coke and local
competitors in International market
2. Trade restrictions in International
market

1. International Market

Opportunities

PEPSI
1. Less inclination towards initiation
of products

Weaknesses

Strengths
1. Strong Support to PBG
2. Adaptive to the market
3. Aggressive towards Non-CSD

SWOT - PEPSI

Could they boost flagging domestic CSD

market ?
As the consumption pattern for CSD is showing a stagnant
pattern, it will not be advisable to focus more on domestic
market. But, it is still generating revenue, hence current
practice shall be continued and should be ready for market
competitiveness
180
160
140
120
100

CSD

Consumption (Gallon/capita)

Bottled water

80

Total consumption of drink in U.S.

60
40
20
0
1970

1975

1981

1985

1990

1994

1996

Year

1998

2000

2002

2003

2004

Would newly popular beverages

provide them with profitable revenue ?

As Coke and Pepsi are dominating the market

share of beverages and the market share of
newly popular beverages is less. Hence, it
newly popular beverages will not provide
profitable revenue.

Was their era of sustained growth and

profitability coming to a close, or was this
slowdown just another blip in the course of
cola giants long enviable history?
The trend for net profit/ sales for Coke and Pepsi shows that it
is a blip in the course of cola giants and is expected to rise
in future.
25

20

15

Net Profit/Sales

Coca-cola Company

10

PepsiCo, Inc.
5

0
1975 1980 1985 1990 1995 2000 2001 2002 2003 2004

Year

Thank You