Cola Wars: Case Write-Up for Many Decades,

Cola Wars: Case Write-Up For many decades, the market for cola could be easily summed up as follows: Coca-Cola vs. Pepsi-Cola. Although Coke clearly dominated, Pepsi was a strong 'also ran,' particularly after branding itself as the taste of the Next Generation. However, in the 1990s, the palates of American consumers began to change, resulting in a sharp leveling off, and then a decline in soda consumption.

The major soft drink companies had negotiated reasonably competitive agreements with the 'links' of their supply chains: smaller bottlers were dependent upon the major brands to survive and the major cola companies negotiated specific arrangements with bottlers to distribute only specific brands (such as Sprite rather than 7-Up, in the markets where these two uncolas were competing against one another). Coca-Cola dominated fountain sales, Pepsi concentrated on the retail market. Analysis: Marketing gaffs and internal trouble at the organization caused Coca-Cola to lose market share.

Pepsi engaged in more effective risk management by expanding into other retail venues, such as buying up well-known fast food chains; placing its emphasis on diet beverages; and promoting non-carbonated beverages. Although the individual markets for specific non-cola beverages like sports drinks were smaller, the profits on such products were often higher than those of carbonated soft drinks. This gave Pepsi a considerable image advantage over Coca-Cola. It also had a more friendly relationship with its bottlers.

Recommendation: Coca-Cola's greatest strength in relation to Pepsi was in its international dominance, particularly in Europe and Latin America, despite regulatory hurdles within those nations it was forced to overcome. As the taste for carbonated beverages bottoms out in America, Coke could further expand its outreach abroad, although Pepsi still has stronger roots in the former Soviet block nations and Middle East. Coke's failure to find a winning strategy in terms of new beverages, and its unilateral focus on soft drinks vs.