Cola Wars

History of Coca-Cola

Dr. John Pemberton, an Atlanta, GA pharmacist, invented Coca-Cola in 1886. It debuted in Atlanta's largest pharmacy, Jacob's Pharmacy, as a five-cent non-carbonated beverage and was originally used as a nerve and brain tonic and a medical elixir. Later on, the carbonated water was added to make the beverage that we know today as Coca-Cola. Coca-Cola was trademarked in 1893. Today Coca-Cola has grown to provide soft drinks and own over 500 brands (coca-cola.com). In 2009, Coca-Cola (NYSE: KO) was number one on the top valuable brands during a recession valuing at $68.73 billion (Fredrix, 2009).

History of Pepsi-Cola

Caleb Bradham, a North Carolina pharmacist, invented "Brad's Drink," in 1893. A carbonated soft drink he had created to serve his drugstore's fountain customers, much like the inventor of Coca-Cola. The name was changed to Pepsi-Cola and trademarked in 1902 (pepsico.com). The PepsiCo portfolio includes 18 brands that generate $1 billion or more each in annual retail sales. PepsiCo (NYSE: PEP) has become one of the world's largest food and beverage companies, with 2008 annual revenues of more than $43 billion (Press Release, 2008)

Coca-Cola and Pepsi-Cola have served soft drinks to billions of people around the world, the two companies are constantly in a fierce battle to be on top. While Coca-Cola has dominated the computation in 2005 after over a 100 years Pepsi-Cola was able to be number one, when it closed up 31 cents at $59.31 to give it a market capitalization of $98.4 billion while Coke closed down 36 cents to $41.15 for a market capitalization of $97.9 billion (Howard, 2005). According the “Fortune 500” companies In 2010, Coca-Cola is ranked at #72 with revenues of $31 million whereas Pepsi-Cola holds the lead at #50 with revenues of $43 million (Money.cnn.com).

Introduction

An oligopoly market is characterized by few firms, higher than normal profits and difficult entry into the market. The Coca Cola...