Submitted by: Submitted by jrleiro29
Views: 621
Words: 2362
Pages: 10
Category: Business and Industry
Date Submitted: 05/22/2012 04:21 PM
HARVARD
BUSINESS
SCHOOL
9-711-462
REV: MAY 26, 2011
DAVID B. YOFFIE
RENEE KIM
Cola Wars Continue: Coke and Pepsi in 2010
For more than él century, Coke and Pepsi víed for "throat shélre" of the world's beverage market. The most intense battles in the so-calIed cola wars were fought over the $74 bi1lion carbonated soft drink (CSD) industry in lhe United States. 1 In a "carefully waged competilive struggle" that lasted [rom 1975 through the míd-1990s, both Coke and Pepsi achieved average annual revenue gTOwlh of aTOund 10%, as both U.S. and worldwide CSD consumptíon rose steadily year after year. 2 According to Roger Enrico, former CEO of Pepsi: The warfare must be perceived as a continuíng battle without blood. Without Coke, Pepsi would have a lough time being an original and IiveIy competitor. The more successful they are, the sharper we have to be. If the Coca-Cola company didn't exist, we'd pray for someone to il1vent lhem. And on lhe other side of lhe fence, I'm sure lhe folks at Coke wOllld say lhal 110lhing contributes as much lo the present-day success of the Coca-Cola company lhan .
Pf~psi.3
Tha! relationship hegan to fray in lhe eady 20oos, however, as US. per-capita CSD consumption started to decline. By 2009, the average American drank 46 gallons of CSDs per year, the lowest CSD consumption level since 1989. 4 Al the same time, the two companies experienced their own distinct ups and downs; Coke suffered severaI operational setbacks whíle Pepsi charted a new, aggressive course in alternative beverages and snack acquisitions. As the cola wars contínued tnto the 21st centllry, Coke and Pepsí faced new challenges: Could they boost tlagging donu.'Stic CSD sales? How could tney compete in lhe growing non-CSD category that demanded different bottling, pricing, and brand strategies? What had to be done to ensure sustainable growth and profitabiJity?
Economics of fue U.S. eSD Industry
Americans consumed 23 gallons of CSDs annually in...