Case Study 1: Cola Wars

INTRODUCTION

The production and distribution in the carbonated soft drink (CSD) industry involves four major contributors or participants: the concentrate producers, bottlers, retail channels, and suppliers. From this, the top two concentrate producers that have been going at each other’s throat for already more than a century are

Coca-Cola and Pepsi-Cola. The main role of a concentrate producer is to blend raw material ingredients for a

particular CSD and package them into containers to be shipped and sold to bottlers. On the other hand, bottlers

work hand in hand with concentrate producers by adding carbonated water and sweetener to the concentrate

as well as bottling or packaging the final CSD product. When it comes to marketing and advertisements, both

parties share a role and contribute equally. But generally, these two companies ruled the CSD world, each with

stories about their humble beginnings.

The first to formulate the Coca-Cola drink we know and love today was John Pemberton, a pharmacist

in Atlanta, Georgia, in 1886. Not long after, Asa Candler acquired the formula in 1891 and pushed for its

advertisement in the market. By 1910, Coca-Cola already had a growing bottling network with 370 franchises.

Years after, it came across many trademark infringement cases because of its growing popularity, but eventually,

the company was able to win its battle in court by patenting its unique bottle design. In the early 1920’s, after

Candler sold the company to a group of investors, Robert Woodruff became its leader. In the 1930’s Coca-Cola

opened to new channels such as grocery stores, and by the end of 1942, the company had already expanded

its operations abroad with 64 plants across European and Asian countries with the help of its influence to the

U.S. government. Similarly, Pepsi-Cola was first formulated by a pharmacist from New Bern, North Carolina,

named Caleb Bradham in 1893. By 1910, it adopted the same strategy of Coca-Cola by acquiring a network of

270 bottlers. However, unlike Coca-Cola, Pepsi-Cola had worse problems during its first years because of its

call for bankruptcy in 1923 and 1932, but they were able to get back to the competition after changing the selling

price of their 12-oz cola to a nickel --- the same price that Coca-Cola sold for their 6.5-oz cola.

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Case Study 1: Cola Wars

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