Looks into the business framework and competitive tactics of Coca-cola and Pepsi over 10 decades of tough competition. New problems and issues of the 21st century comprise increasing the waning local cola sales and unearthing novel revenue generation means. Both companies also started to adapt and change their packaging, pricing, and brand tactics and strategies. They turned to developing countries around the globe to enhance development and give more weight to their brand portfolios to comprise of noncarbonated drinks like tea, juice, sports drinks, and bottled water. For more than 100 years, Coca-Cola and Pepsi-Cola had competed for the "throat share" of the global drink segment. The most intense rivalry of the cola wars was observed to battle over the $60 billion US industry, where the normal American devours 53 gallons of carbonated soft drinks (CSD) annually. In a "carefully waged competitive struggle," from 1975 to 1995 both the competitors i.e. Coke and Pepsi had accomplished an average yearly growth rate of approximately 10% as both U.S. and global CSD intake continually increased. These warm circumstances were challenged in the late 1990s; though when U.S. CSD intake declined successively annually for two years and global trade turned sluggish for both Coke as well as Pepsi. The case talks about whether Coke's and Pepsi's time of continued expansion and development and revenue generation was about to end or if the seeming decline was another common strike in the period of a century of admirable performance. A redrafted account of a prior case authored by Michael E. Porter and David B. Yoffie.
1. Why was it that the concentrate producers have been so profitable?
2. Compare the profitability of the concentrate industry to the bottling industry -- why is the profitability so different?
3. What is happening in the soft drink industry? What are the challenges facing the industry?
4. Why was the Pepsi Challenge so successful? How would you evaluate Coke's response?
5. What should Coke and Pepsi do next?
6. How has the competition between Coke and Pepsi affected the industry’s profits?
7. Can Coke and Pepsi sustain their profits in the wake of flattening demand and the growing popularity of non-carbonated soft drinks?