Korea
rP os t
9-711-462
REV: MAY 26, 2011
DAVID B. YOFFIE
RENEE KIM
op yo Cola Wars Continue: Coke and Pepsi in 2010
For more than a century, Coke and Pepsi vied for “th roat share” of the world’s beverage market.
The most intense battles in the so-called cola wars were fought over the $74 billion carbonated soft e drink (CSD) industry in the United States.1 In a “carefu lly waged competitive struggle” that lasted u from 1975 through the mid-1990s, both Coke and Pepsi a chieved average annual revenue growth of h e dil around 10%, as both U.S. and worldwide CSD consumpt ion rose stead y year after year.2 According to Roger Enrico, former CEO of Pepsi:
tC
The warfare must be perceived as a continuing ba ttle without blood. Without Coke, Pepsi would have a tough time being an original and lively c ompetitor. The more successful they are, the sharper we have to be. If the Coca-Cola company didn’t exist, we’d pray for someone to invent them. And on the other side of the fence, I’m sure the folks at Coke would say that nothing contributes as much to the present-day succ ess of the Coca-Cola company than . . .
Pepsi.3
That relationship began to fray in the early 2000s, ho wever, as U.S. per-capita CSD consumption started to decline. By 2009, the average American drank 4 6 gallons of CSDs per year, the lowest CSD consumption level since 1989.4 At the same time, the tw o companies experienced their own distinct w ups and downs; Coke suffered several operational setba cks while Pepsi charted a new, aggressive course in alternative beverages and snack acquisitions.
No
As the cola wars continued into the 21st century, Co ke and Pepsi faced new challenges: Could they boost flagging domestic CSD sales? How could they compete in the growing non-CSD category that demanded different bottling, pricing, and brand s trategies? What had to be done to ensure sustainable growth and profitability?
Economics of the U.S. CSD Industry
9-711-462
REV: MAY 26, 2011
DAVID B. YOFFIE
RENEE KIM
op yo Cola Wars Continue: Coke and Pepsi in 2010
For more than a century, Coke and Pepsi vied for “th roat share” of the world’s beverage market.
The most intense battles in the so-called cola wars were fought over the $74 billion carbonated soft e drink (CSD) industry in the United States.1 In a “carefu lly waged competitive struggle” that lasted u from 1975 through the mid-1990s, both Coke and Pepsi a chieved average annual revenue growth of h e dil around 10%, as both U.S. and worldwide CSD consumpt ion rose stead y year after year.2 According to Roger Enrico, former CEO of Pepsi:
tC
The warfare must be perceived as a continuing ba ttle without blood. Without Coke, Pepsi would have a tough time being an original and lively c ompetitor. The more successful they are, the sharper we have to be. If the Coca-Cola company didn’t exist, we’d pray for someone to invent them. And on the other side of the fence, I’m sure the folks at Coke would say that nothing contributes as much to the present-day succ ess of the Coca-Cola company than . . .
Pepsi.3
That relationship began to fray in the early 2000s, ho wever, as U.S. per-capita CSD consumption started to decline. By 2009, the average American drank 4 6 gallons of CSDs per year, the lowest CSD consumption level since 1989.4 At the same time, the tw o companies experienced their own distinct w ups and downs; Coke suffered several operational setba cks while Pepsi charted a new, aggressive course in alternative beverages and snack acquisitions.
No
As the cola wars continued into the 21st century, Co ke and Pepsi faced new challenges: Could they boost flagging domestic CSD sales? How could they compete in the growing non-CSD category that demanded different bottling, pricing, and brand s trategies? What had to be done to ensure sustainable growth and profitability?
Economics of the U.S. CSD Industry