Date: 01-28-2014
Subject: A Hundred-Year War: Coke vs. Pepsi, 1890s – 1990s Case Analysis

The cola war between Coca-Cola and Pepsi-Cola is a ongoing battle over the $56 billion soft drink industry. Taking in consideration that the industry in the U.S. is a mature and saturated market, both companies are expanding their brands abroad looking for growth opportunities. As the war between the companies continues, they face several issues about their future in the U.S. and abroad. What strategies can the companies implement to continue their growth in the domestic market? How can the companies respond to the constant changes in the international market conditions? And would the changes in the soft drink industry landscape affect the companies’ profitability? How?

Industries like soft drinks, electronics, and others are hypercompetitive, meaning that firms that are in these industries need a fundamental shift in the focus of their strategies to maintain themselves in the future. These firms need to develop temporary advantages to either react to a competitor or to create distance. The goal is to disrupt the status quo by moving to the next innovation quickly. In order for the companies to sustain growth domestically, they need to move on to the next innovation. As was reported in the case, aside from soft drinks, bottled water is the only segment that has shown constant increases in consumption every year since 1975. For the past 23 years, bottled water has increased nearly 842% (Appendix 1). As a result, a trend for healthier products could be developing in the future. To tackle this trend Coke could take advantage of its capabilities and experience with the production of bottled water and launch a naturally flavored bottled water. Pepsi, on the other hand, could take advantage of its alliance with Frito-Lay to launch healthy snacks like chips or