coca-–-cola-vs-pepsi-co.pptx

8/11/2019 Coca--Cola-vs-Pepsi-Co.pptx

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CocaCola vs Pepsi Co

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IndustryBackground

1886: John Pemberton 1893: Caleb Bradham

Production and Distribution

Concentrateproducer

Bottler SupplierRetail

Channel


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ConcentrateProducers

CustomerDevelopmentAgreements

74.8 % - US CSD

Market in SalesCoca Cola and

Pepsi

SupportingSales Efforts,

SettingStandards and

OperationalImrovements

Advertising,

Promotion,Market

Research,Bottler Support


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Capital Intensive and High SpeedProduction Line

Concentrate (45%) + Carbonated Water+ Sweetener (5%) = Bottles / Cans (45%

+ Labor)

Direct Store Door Delivery

Profits > 40 % | Operating Margin7 %

Coke1stto build nationwidefranchised bottling networkMaster

Bottler Contract, 1987

Pepsi Master Bottling Agreement

Bottlers


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Suppliers

Raw materialsCaramel coloring,

critic acid,natural flavors,

caffeine

Packaging and

Sweeteners

Choose suppliersbased on needs

and costs


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1950 1963 1965 1970 1978

Alfred Steeles

BEAT COKE

Pepsi Generation

2-to-1 margin

Concentrate Prizes

Equalize

PepsiCo

Teem (1960) , Mountain Dew (1964)

US Market Share - Doubled

1955 1960 1961 1963 1979

Minute Maid, Duncan Foods and Belmonte Springs Water

Americans

Preferred TasteNo Wonder Coke

Refreshes Best

Fanta

Sprite Low Calorie

Cola Tab

ColdWar

Pepsi Challenge, Taste

Pepsi wins Food

Store Sales

Concentrate

Contract


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ColdWar

1980 - Switch from Sugar to High Fructose Corn Syrup

1981 to 1984 - Marketing EffortDoubled

Sold off NONCSD Business such as Wine, Coffee, Tea

1982Diet CokeThird Largest Selling CSD

198599 year old format changed

Coca Cola Classic and 11 new products

1981 to 1984 - Marketing EffortDoubled1980s - 13 new products

10 Major Brands | 17 or more Container Types | Market Share

Struggle | Retail Price Discount


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CokeFizzles !!

Bottler consolidation made smaller concentrate producers increasingly dependent on the Pepsi

and Coke bottling networks for distribution of their products

Great reliance on traditional CSDOriented model

Death of CokesCEO, Robert Goizueta

Lost a high profile race-discrimination suit

Hit hard by currency crises in Asia and Russia

Contamination scare in Belgium and India

Laid off 7,000 employees from 2001-2004

Paid $ 21 million to Burger King for rigging a marketing test

Investigated by SEC for channelstuffing; eventually settled on the charges in Japan

Failed to execute many plans: JV with P&G, buyout of SoBe and Quaker Oats

Ended up letting Pepsi have a wider range of products

Bottler Consolidation : CCEAnchor Bottler


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Annual Growth Annual Growth

Net Income4.2 % Net Income17.6 %

Shareholders Return Shareholders Return

-26 % 46 %

FortuneReversal


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too fattening

CocaCola ZERO | Sierra Mist Free | Pepsi One | Diet

Coke with Splenda


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47.3 %

27 %


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Search for Sustainable Strategies

Relationships with the Bottlers

Resist control for power from Mass merchandisersLow Volume-High Margin products VS High Margin-Low Volume products

International Wars

Coke dominated in Western Europe and Latin American countries

Pepsi was strong in the Middle East and Southeast Asia

International markets meant a significant lot to Coke, 80% profits (Pepsi-33%)

Enjoyed a world market share of 51.4%, Pepsi-21.8%, Schweppes-6%

Problems Faced

Antitrust regulation, Price controls, Advertising restrictions, Foreign exchange

controls, Lack of Infrastructure, Cultural differences, Local Competition


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coca-–-cola-vs-pepsi-co.pptx

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