The Cola Wars
The classic account of the Coke-Pepsi rivalry.
Summary
J. C. Louis and Harvey Yazijian wrote this history of the competition between Coca-Cola and Pepsi-Cola, covering the industry from its patent medicine origins through the marketing battles of the 1970s.
The business history covers the founding of both companies, Coca-Cola's early distribution decision to sell bottling rights in perpetuity at a fixed syrup price, which built national distribution rapidly and created a structural problem the company spent decades resolving; Pepsi's bankruptcies and its Depression-era positioning on price with a larger bottle; the wartime allocation of sugar and Coca-Cola's arrangement to supply American forces overseas, which built its international position; and the postwar competition in which Pepsi positioned itself generationally against Coca-Cola's incumbency.
The marketing material covers the campaigns, the Pepsi Challenge blind taste tests, and the bottler and fountain distribution systems that determined where each brand could be bought. The authors also cover the industry's political and regulatory dealings, including the sugar and corn syrup lobbying and the international expansion arrangements. The book was published in 1980, so it precedes New Coke, the bottler consolidations, the diversification of both companies into other categories and the decline of carbonated soft drink volumes. It is a period business history rather than an analysis.
Key takeaways 7
- Coca-Cola sold perpetual bottling rights at a fixed syrup price, which built national distribution fast and constrained the company for decades.
- Pepsi established itself during the Depression by offering twice the volume at the same price, which positioned it permanently as the value option.
- Coca-Cola's arrangement to supply American forces during the war built its international bottling network at government expense.
- The Pepsi Challenge attacked Coca-Cola's core claim by testing the product without the brand attached.
- Distribution through bottlers and fountain accounts determined availability, which mattered more than advertising in most markets.
- Both companies depended on relationships with sugar and later corn syrup suppliers whose costs determined their margins.
- Brand competition in the category operated through positioning against the incumbent rather than through product differences.
Who should read it
Operators and investors in consumer brands who want the origin of a durable duopoly and of the franchise bottling structure.
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Where it sits in the reference 2
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