Section D Group 3

Ramesh Babu (PGP/20/220) Rakesh Guguloth(PGP/20/231)

Usha Meena (PGP/20/249) Jeremiah Laitphlang (PGP/20/214)
Shailly Chaurasia (FPM/10/09/QM) Atul Chaudhary (PGP/20/202)
 Background
Cola war between Coca-Cola and
Pepsi for market share in beverage
market.
Carbonated Soda Drink market size
of about $74 billion in the US alone
Both had an annual Growth of
about 10%
Wars was waged between 1975 to
1990s
From 1970s onwards the
consumption of CSDs was
increasing at a rate of 3%.
New flavors and Diet were
introduced during this period and
the prices were also decreasing
Problem
By 2009 an average American
consumed on 46 gallons of CSD
per year
Decline in the market share of
CSD dropped to 55%
Acquisition of alternate snack
and drinks by Pepsi
Non CSD drinks needed
different bottling, packaging
and branding strategies
What should be their
strategies that would lead to
sustainability and Profitability.
CSD industry overview
Less capital investment and High margins
Concentrat Major costs Brand Building and product development
e Negotiating CDA with retailers
Producers

Capital intensive and low margins

Direct Store Delivery securing Shelf space, stacking, promoting etc
Bottlers Franchise agreement and marketing support from concentrate producers
Final say in retail pricing

Super markets / Fountain outlets / Vending machines / Gas stations etc

Retail
Pepsi Retail outlets | Coke Fountains
Channels Pepsi Taco Bells, KFC, Pizza Hut | Coke Burger King, McD

Concentrate Producers Caramel coloring, Citric acid, Caffeine etc

Bottlers Metal cans and Plastic bottles
Suppliers Coke and Pepsi negotiating contracts for their bottlers
Porters 5 forces analysis
Threat of new Buyer power
Strong brand loyalty forces
entrant retailers to stock the popular
Strong brand loyalty brands
High capital requirement Food Store
Strong distribution networks Convenience store
High advertising spending Fountain and Vending
Threat of substitutes
Machine
Bottling Network
Retailer Shelf SpaceSwitching costs are very low
Shift to non CSD over health
Supplier power Industry Rivalry
issues
Alternatives for sweetener Switching costs are very low
Coke and Pepsi largest Cut-throat competition
consumer of metal cans between Coke and Pepsi
Commodity ingredients
 4P analysis

Place Promotion
Product
Coca cola and Pepsi Price Both players are
bottlers offer direct to aggressive in
Coca- cola and Pepsi store delivery to the promotions and itfirst
have a wide range of small scale retailers, Coca cola and Pepsi started when Pepsi
products cola and non- vending, machines and were in an oligopoly started with its blind
cola in CSD category gas stations. market with many taste tests called the
and also they had other buyers and a few Pepsi Challenge
beverages had They also were
available at the shelves sellers They have TV ad
of supermarkets such campaigns with catchy
They also have a wide as Walmart. They follow the taglines and jingles,
range of SKUs from They were also pricing strategy based brand ambassadors
200ml to 2 Liters available at the QSRs on the pricing who were famous
such as burger King, strategy of their celebrities, Point of
KFC etc. competitors purchase displays.
Evolution of US Soft Drink Industry 1940s
1920s
Internatio
&30s
Early nalization
Intense during
1891 Years franchisin
Imitations World War
g, II
1891 & branding,
First infringem
bottling advertisin
188 ent suits
Formula franchise g&
6 distributio
acquired for $1
Formulate & sold as n
d for CSD e n t suit
Mental & f ri n g em
l ed in
physical o ke fi i & lo st
- C Peps
disorders 1938 in s t
aga 1930s
1923
Regained
&1932
Till grounds
Bankruptc during
1910 y
1893 great
Flourished depression
Invented
 CEO(195
Alfred 0s) Donald
Steele Kendall

Beat Coke Take home Pepsi Generation - Young at

sales and family Strategy heart, improve store
consumption delivery service

New products
(1960s)

Diversification
into non-CSDs

Nonreturnable glass bottles and

metal cans
Rebates, retail 1974 Pepsi
price
Challenge
discounts &
Blind Taste
counter
Tests
advertisement
s
 Cola Wars
Coca Cola Pepsi
1974-1999 1974-1999
Diet Coke was introduced, grabs significant
Pepsi Lite (1 Calorie) was introduced
market share
New Coke fails and classic coke returns Enters fast food business

Coca cola Enterprises established Out spaces coke in food store sales

Aggressive Acquisition of bottling plants Pepsi Bottling Company goes public (1999)

2000-2010 2000-2010

Offers alternative low calorie beverages Offers low calorie beverages

Exclusive deals with Subway, Burger King and
Supplies to Taco Bell, KFC and Pizza Hut
McDonalds
Coke holds big lead over Pepsi in CSD market Snack food lines are profitable
 Shift in Consumption Patterns and
Alternative Strategies for Expansion
Growing linkage between CSD and obesity.
Results:
1)Banned in schools
2) Increase in Soda Tax
3) Decrease in customer loyalty
4) Decrease in sales
)Strategies for Expansion:
1)Freestyle soda machines
2) Pepsi changed its image
3) Increase in advertisement and customer loyalty such as World Cup 2010
4) Pepsi entered into snack section
5) Replacement of HFCS with natural sugar
6) Use of Stevia herb- a natural, zero calorie sweetener
7) Introduction of juice , sports , energy and tea-based drinks.
8) Coke acquired Vitamin water drinks
9) Internationalization of both brands outside USA
 Global soft drink market
The global soft drink market is led by carbonated soft drinks (or CSDs), which had a
market size of $337.8 billion in 2013
 Coca Cola
Revenue in 2016 - $44,294 million
More than 500 brands, including
sparkling beverages, juices and juice
drinks, coffee, tea, sports drinks,
water, valueadded dairy, energy and
enhanced hydration drinks
17 brands that generate more than a
billion dollars each in revenue
Coca cola has remained a beverage
company
Sustainability
Working together with our
bottling partners
Empower women
Better manage water resources
Pepsi
Revenue in 2016- $63,056
million
Diversified portfolio- 53% food
products and 47% beverages
22 brands that generate more
than a billion dollars each in
revenue
Sustainability
Human- Dialing up nutrition
and reducing sodium sugar
and saturated fat in their
products
Environmental- Conserving
water, cutting down waste
Pepsi or Coca- Cola?
1996
Pepsis value in the stock market was less than half of Coca-Cola's
Pepsis profits trailed those of its rival in Atlanta by 47 percent.

2006
Pepsi beat Coke in market capitalization for the first time in their 108-year
rivalry
Great irony of Pepsi's rise is this: It has never sold more soda than Coke,
even today
Adverse trend in the carbonated beverage industry continuing
Consumers seeking out healthier alternatives to sugary soft drinks
Competition in other soft drink segments
Consumers are paying higher prices for soda- new types of packages- more
price per ounce
Coca-Cola's lead in the soda market looks pretty secure