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Establishment of the two brands: Coca-Cola was formulated in 1886 by pharmacist John Pemperton

who sold the product at drug stores as potion for mental and physical disorders. In 1891, Asa Candler

acquired the formula, established a sales force and began brand advertising of Coca-Cola. In 1919, went

public under control of Robert Woodruff expanded and developed in national and international

markets. Coca-cola was remarkably successful during WWII with the high CSD consumption from the U.S

soldiers. Pepsi was created in 1893 in North Carolina by Pharmacist Caleb Bradham. By 1910 Pepsi had

built a network of 270 bottlers. Pepsi struggled and declared bankruptcy twice. During great depression

grew in popularity due to price decrease to a nickel. In 1938, Coke sued Pepsi-Cola brand for

infringement on Coca-Colas trademark.

Beginning of the Cola War: In 1950, newly appointed CEO Mr. Alfred Steele who was the marketing

executive for Coca-Cola, began a new campaign for Pepsi named Beat Coke. Steele made bottlers to

concentrate on take home sales through supermarkets and Pepsi introduced new 26 ounce bottle at the

same time for family consumption. Later in 1963, new CEO Donald Kendall launched a new campaign for

the young generation and the people who think themselves as young at heart, named Pepsi

generation. Intense promotion were held to reach to the customers mind and thus Pepsi were able tonarrow cokes lead to 2-to-1 margin at that time. In this period, Pepsi sold concentrate to its bottlers at

20% less price than coke and also improved the existing store delivery services. Pepsi also promised to

use more on promotion and advertisement to overcome the bottlers opposition. On the other ha nd,

Cokes bottlers were still fragmented with more than 800 independent franchised bottlers all over US. In

the late 1950s, Pepsi began offensive strategies to gain advantage over Coca-cola by starting Americans

Preferred Taste campaign under CEO Robert Woodruff, and another one named No Wonder Coke

Refreshes Best in 1960. High competition were seen as both the brands started experimenting on new

cola and non-cola flavors as well as new kind of packaging throughout 1960s. Coke introduced Fanta,

Sprite and Low Calorie Tab; whereas Pepsi came up with Teem, Mountain Dew, and Diet Pepsi etc. Also

both the companies have shifted their focus on other industries and bought or joined with some ofthem. As Coke was near saturation of over 22.7 gallons per capita in 1970, Pepsi doubled their share

between 1950 and 1970.

Pepsi Challenge: Pepsi directly strike force against Coke by running the Pepsi Challenge in Dallas, Texas;

where Coke was the leader far ahead of Dr. Pepper and Pepsi. The Challenge was a blind taste tests

showing people prefer Pepsi over Coke, later on Pepsi launched the campaign nationwide. Coke hit back

with rebates, rival claims, retails price cuts and advertisements against the taste of Pepsi. They used

retail price cuts selectively were the Coke bottlers outnumbered those of Pepsis franchisee bottlers.

Never the less, Pepsi passed coke to become the first in food store sales in 1979. At that moment, coke

was trying to gain more flexibility in pricing concentrate and syrups. They began to sell unsweetenedconcentrate to bottlers, adjusted price to the modification of ingredients, thus later on asked for a huge

price hike which was followed by Pepsi, also increasing price by 15%.

Battle heat up: Coca-colas top management change in 1980 brought some technical changes like

replacing sugar with lower priced high fructose corn syrup; Pepsi soon followed it 3 years later. Bothe

the brands simultaneously spend almost double to what they had earlier between the years 1981 to

1984, promising a top level battle in the promotional activities. 1982s sensation from Coca-cola - Diet

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Coke was the most successful consumer product launch of the eighties, became the third largest selling

soft drink in US. In 1985, Coca-cola decided to change their 99 year long formula and after three months

brought again with a new name Coca-Cola Classic; retained new formula under the name New Coke,

though six months later they announced Classic to be the flagship brand. By the late 1980s both brand

were offering more than ten major brand. Consumers of both brands were getting offers like price off

and discounts. In 1990s, another player hit the ground as Cadbury Schweppes became the third largest

concentrate producer after Coke and Pepsi.

Bottler Consolidation & Spin off: Coke Struggled to persuade bottlers for promotions, upgrading

equipments and new product launches. The independent franchised bottlers actually suffered in the

battle between two heavyweights. Situation changed to their favor as Coke began buying bottlers who

had harsh conditions, and soon selling them to potential bottlers. This basically allowed coke to expand

beyond their territories, and later in 1986 coke made a master contract allowing them to change their

concentrate price at any suitable time they want. As Doug Ivester became the CEO, Coke sold 51%

shares to public retaining the rest and creating an independent bottling subsidiary - Coca-Cola

Enterprises (CCE). CCE invested to mega technologies like high levels of automation. Coke continued toacquire franchised bottlers and sold them to CCE, and retained substantial managerial influence. In

1980s Pepsi also step forward by acquiring MEI bottling for $591 million, Grand metropolitans Bottling

operations for $705 million and General Cinemas Bottling operations for $1.8 billion. They were

confident to run bottling business smoothly from their experience of handling snack food and restaurant

businesses before. In 1999 Pepsi Bottling Group (PBG) went public retaining 35% equity stake.