Coca Cola Competitive Analysis

PepsiCo and Coke both were originally vertically integrated; the two giants developed the products, manufactured and distributed them. In the past century, somewhat in the 80s and 90s, Pepsi Co and Coke have been battling over market share of the carbonated sugar-based beverage industry. At the time there was an increase in consumption of soda drinks, so both companies moved away from their vertical integration strategy, mainly focusing on product development and marketing and diverging from manufacturing and logistics responsibilities. However in the recent decades, a change in consumption preference from consumers has made these two giants reverting back to its original strategy, compelling them to integrate backward. With the declined of sugary carbonated drinks, consumer have been switching to power drinks, juices, sport drinks and water. In early 2010, PepsiCo closed the acquisition deal on both its largest distribution for $7.8 billion, Pepsi Bottling Group and PepsiAmericas. Both are now a part of Pepsi’s logistic system, Pepsi Beverages Company. The Coca Cola Company followed suit and acquired its largest distributer as well. The acquisition deal for its distributer Coca Cola Enterprise closed late of 2010 for 12.7$ billion, part of which CCE would buy Coca Cola’s bottling operations in Norway and Sweden. Both with a diversify product portfolio will have an advantage on flexibility in their logistics operations, also cutting out the middleman, ultimately gaining a price advantage and direct relationship with major retailers like Walmart. However, this distribution consolidation strategy will most likely give PepsiCo an advantage over Coca Cola. With PepsiCo snacks business, they will gain more from route-to-market (RTM) aligning marketing, sales and distribution to optimize expenses, accordingly giving PepsiCo more leverage over its direct retailers.

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