Cola Wars - Coke and Pepsi

Introduction

The war between Coke and Pepsi has been going on since around 1938. They are both very competitive companies that keep the carbonated soft drink industry thriving. Both companies control the vast portion of market shares within the industry. These two companies have single handedly made this industry a very competitive and a hard-to-enter industry, which is no surprise considering the hard work put into each company in order for them to maintain and plan for future success.

This industry has proven to be profitable for concentrate producers, bottlers, and retail channels. They give customers a product that they think they can't live without. This dates back to 1942, when Coke was given the "exemption from wartime sugar rations" so they could produce Coke for soldiers (Cola Wars Continue: Coke and Pepsi in 2006). This industry has truly become a part of our everyday lives. Both companies had a similar start, at the hand of a pharmacist, and they both fight their hardest to compete better than the other. Coke has stayed at top the most, but Pepsi did have its chance to hold the high ranking position in 1979 when they ran the Pepsi Challenge campaign. We think it is a safe assumption that both of these companies will control most of the carbonated soft drink (CSD) industry market share for years to come.

This paper will analyze the industry using Porter's five force analysis. An analysis will be done on the concentrate producers and the bottlers within the industry. A breakdown of each of the analyses will be done in order to state the findings found for both the concentrate producers and bottlers. Next, there will be a discussion as to whether or not Coke and Pepsi can sustain their profits in the wake of flattening demand and the growing popularity of non-carbonated drinks. The last portion of this paper will debate on which company, Pepsi or Coke, will ultimately gain the advantage over the other.