cola wars case study

COLA WARS CASE STUDY

SUBMITTED BY

ZINNIA DHODY (2680)

INTRODUCTION Most intense battles of the cola wars were fought over the $60 billion industry in the United States Average American consumed 53 gallons of carbonated soft drinks (CSD) per year. In late 1990’s, US CSD consumption dropped for two more consecutive years. Worldwide shipments slowed for both Coke and Pepsi. Due to this, the relationship was threatened and both firms began to modify their bottling, pricing and brand strategies.

COCA COLA

With a portfolio of more than 3,300 beverages in over 200 countries, from diet and regular sparkling beverages to still beverages such as 100 percent fruit juices and fruit drinks, waters, sports and energy drinks, teas and coffees, and milk-and soy-based beverages, our variety spans the globe.

COCA COLA PRODUCTS

PEPSI COLA

PepsiCo India’s expansive portfolio includes iconic refreshment beverages Pepsi, 7UP, Nimbooz, Mirinda, Slice and Mountain Dew; in addition to low calorie options such as Diet Pepsi, hydrating and nutritional beverages such as Aquafina drinking water, isotonic sports drinks - Gatorade, Tropicana 100%, Tropicana Twister fruit juices, aliva, cheetos, kurkure, lays, lehar.

PEPSI COLA PRODUCTS

CONCENTRATE PRODUCERS BOTTLERS RETAIL CHANNELS SUPPLIERS

FOUR MAJORPARTICIPANTS

CONCENTRATE PRODUCERS

CONCENTRATE PRODUCERS

The concentrate producer blended raw material ingredients (excluding sugar or high fructose corn syrup), packaged it in plastic canisters, and shipped the blended ingredients to the bottler. The concentrate producer added artificial sweetener to make diet soda concentrate, while bottlers added sugar or high fructose corn syrup themselves.

BOTTLERS

BOTTLERS

Bottlers purchased concentrate, added carbonated water and high fructose corn syrup, bottled or canned the CSD, and delivered it to customer accounts. Coke and Pepsi bottlers offered “direct store door” (DSD) delivery, which involved route delivery sales people physically placing and managing the CSD brand in the store. The number of U.S. soft drink bottlers had fallen, from over 2,000 in 1970 to less than 300 in 2000. Historically, Coca-Cola was the first concentrate producer to build nation-wide franchised bottling networks

RETAIL CHANNELS

RETAIL CHANNELS

In 2000, the distribution of CSDs in the United States took place through food stores (35%), fountain outlets (23%), vending machines (14%), convenience stores (9%), and other outlets (20%).

SUPPLIERS

SUPPLIERS

The majority of U.S. CSDs were packaged in metal cans (60%), then plastic bottles (38%), and glass bottles (2%). Cans were an attractive packaging material because they were easily handled, stocked, and displayed, weighed little, and were durable and recyclable. Since the can constituted about 40 % of the total cost of a packaged beverage, bottlers and concentrate producers often maintained relationships with more than one supplier. Major can producers included American National Can, Crown Cork & Seal, and Reynolds Metals.

COLA WARS

In 1950, Alfred Steele, a former Coca-Cola marketing executive, became Pepsi’s CEO. Steele made “Beat Coke”his theme.

In 1963, under the leadership of new CEO Donald Kendall, Pepsi launched its “Pepsi Generation” campaign that targeted the young and “young at heart.”

Pepsi sold concentrate to its bottlers at a price approximately 20% lower than Coke.

In the early 1970s, Pepsi increased the concentrate price to equal that of Coke.

Coca-Cola and Pepsi-Cola began to experiment with new cola and non-cola flavors and a variety of packaging options in the 1960s.

Before then, the two companies had adopted a single product strategy, selling only their flagship brand.

SWOT OF PEPSI

STRENGTHS

Pepsi has a broader product line and outstanding reputation. Merger of Quaker Oats produced synergy across the board. PepsiCo sells three products through the same distribution channel. For example, combining the production capabilities of Pepsi, Gatorade and Tropicana is a big opportunity to reduce costs, improve efficiency and smooth out the impact of seasonal fluctuations in demand for particular product.

WEAKNESS

Pepsi hard to inspire vision and direction for large global company.

Not all PepsiCo products bear the company name

PepsiCo is far away from leader Coca-cola in the international market - demand is highly elastic.

OPPORTUNITY

Food division should expand internationally Noncarbonated drinks are the fastest- growing part of the industry There are increasing trend toward healthy foods Focus on most important customer trend - "Convenience".

THREATS

F&B industry is mature Pepsi is blamed for pesticide residues in their products in one of their most promising emerging market e.g in India Over 50 percent of the company's sales come from Frito-Lay; this is a threat if the market takes a downturn PepsiCo now competes with Cadbury Schweppes, Coca-Cola, and Kraft foods (because of broader product line) which are well-run and financially sound competitors.

SWOT OF COKE

STRENGTH

Extensive advertising, acceptable

promotions or business programs. Coca-Cola's bottling arrangement is one

of their greatest strengths. It allows them

to conduct business on a all-around

calibration

WEAKNESS

Coca-Cola has afresh appear some "declines in assemblage case volumes in Indonesia and Thailand due to bargain customer purchasing power." Being absorbed to Coca-Cola is a bloom problem, because bubbler of Coca-Cola circadian has an aftereffect on your physique afterward few years.

OPPORTUNITY

Cast acceptance is the cogent agency

affecting Coke's aggressive position. The primary affair over the accomplished

few years has been to get this name cast

to be even bigger known

THREATS

Currently, the blackmail of new applicable competitors in the carbonated bendable alcohol industry is not actual substantial. Possible substitutes that continuously put burden on both Pepsi and Coke cover tea, coffee, juices, milk, and hot chocolate.

GROWTH OF COKE

GROWTH OF PEPSI

COMPARATIVE ANALYSIS

COLA WARS ARE BACK

21 july 2010 NEW YORK -- The cola wars are back. PepsiCo Inc. will premiere a

revamped version of its "Diner" Super Bowl commercial on Monday night, pitting its Pepsi MAX against Coca-Cola's popular Coke Zero, a brand five times its size. Coca-Cola Co., Atlanta, has been wildly successful with its five-year-old Coke Zero brand, which taps into the healthy shopper mindset. Now PepsiCo wants to move into that market with Pepsi MAX, which has its roots in Europe but is relatively new to the U.S. Pepsi MAX first launched in 1993 overseas and came to the U.S. in 2007, two years after Coke Zero's release. The entire brand did $1.7 billion in sales in 68 countries last year. Coke Zero has been growing in the double digits for four years now and is in 133 countries. The brand is worth more than $1 billion in sales.

The cola wars have been successful for Pepsi and Coca-Cola in the past because they draw attention to the products and they'll likely do so again

THANK YOU