Cola Wars

The Soft Drink Industry is mainly engaged in manufacturing carbonated soft drinks (CSD) from concentrates and syrups. The CSD industry is very lucrative, mainly for the concentrate producers than the bottlers. The top two leading companies of the business market are Coca-Cola and Pepsi. There is a strong rivalry between dominant producers Coca-Cola & Pepsi and the negotiating power of the buyers who place huge orders for soft drinks are strong.

The threat of new entrants to the industry bring new volume and a desire to achieve market share that puts pressure on prices, costs, and the rate of investment necessary to compete in the market. The threat of new entry is considerably low in today’s CSD market.

With the inception of the CSD industry, Coca-Cola was the primary leader of the market, and then came along the new entrant Pepsi. Pepsi made an enormous impact on sales and profits of Coke. But, today Coca Cola wars between Coke and Pepsi are so dominant that it’s nearly impossible for a new threat or entrant. The two companies have competed on various strategies, to include price discounts, widespread marketing, and autonomous bottling facilities.

Coca-Cola hit the market back in the 1890s and nearly 40 years later Pepsi was launched in 1939. Immediately, Pepsi had to figure out a way to become the dominant force in the market and focused its strategy aimed on packaging. When it was launched, it came out with a campaign of “Twelve full ounces, that’s a lot. Twice as much for a nickel, too”, which forced Coke to launch a new packaging campaign to compete against product size. The rivalry was nonstop; If Coke changed its formula, then Pepsi did too. If Coke launched a new flavor of CSD then, Pepsi launched two new flavors.

The bargaining power of suppliers captured more of the value for themselves by charging higher prices and changing costs to industry participants. The CSD industry of bargaining power of suppliers is low, as there are many suppliers in this industry. Because of this, producers