Bus508

Coca-Cola and Pepsi-Cola are among the most successful products in the whole history of business. Coca-Cola is said to be the second most well-known phrase in the world. The most well-known is "okay." So if you say "Coca-Cola is okay" you will be understood in more places by more people than any other sentence.

The reward for this fame have been princely. At the end of 1995, the Coca-Cola Company had a market value in excess of $100 billion. It was the fourth most valuable publicly traded company in the United States.

The Pepsi-Cola story is equally remarkable. PepsiCo, the parent company which owns Pepsi-Cola,was worth more than $50 billion at the end of 1995. Pepsi-Cola was bought out of bankruptcy for $12,000. But it has emerged as Coca-Cola's only sustained rival.

How was all this wealth created from a product as simple as a carbonated soft drink? How did Coca-Cola become such a marketing powerhouse? How did Peps-Cola grow from a price of $12,000 to being a key component in a company worth more than four thousand times that amount?

This chapter answers these questions.

-Richard Tedlow, author of New and Improved

THE GREAT COLA WARS

COKE VERSUS PEPSI

Soft drinks-that is, nonalcoholic beverages-trace their ancestry back to the mineral springs of Europe. In the nineteenth century, numerous mineral waters were sold in the United States. Druggists often flavored mineral water with various extracts, serving homemade brews of root beer or ginger ale to please the patrons of their soda fountains. By the late nineteenth century, the owners of a few such beverages were attempting to distribute them beyond their local trading areas. However, the difficulties in obtaining broad, regional distribution were considerable. Bottling technology was in its infancy, so most soft drinks were sold at the soda fountain. And there was little reason for fountain proprietors to pay for the use of someone else's drink when they could mix their own with such ease.

I call...