Soft Drink Industry

Coke and Pepsi as Industry Leaders 2

Table 2: Domestic Soft Drink Market 13

The Beverage Industry: Coke vs. Pepsi

Just before the turn of the century, prospective soft drinks were being formulated by southern pharmacists, with an eye towards relieving indigestion (Hoover's, 1995). From the first decade of the twentieth century until the 1960s, the competition in the beverage industry was primarily between equals; Coca Cola fought it out with Pepsi Cola for market share, and juice or coffee companies competed with each other.

In the 1960s, the competitive edge in the beverage industry went to Coca Cola, with its purchase of Minute Maid in 1960, the introduction of Sprite in 1961, and the introduction of Tab in 1963 (Hoover's, 1995). Pepsi Cola, with a similar stable of soft drinks, became a key player in the fast food industry with the acquisition of Frito-Lay in 1965, Pizza Hut in 1977, Taco Bell in 1978, and Kentucky Fried Chicken in 1986 (Hoover's, 1995).

Less powerful entrants in the beverage industry have had an effect on defining exactly what a beverage company is. Quaker's Gatorade and Snapple, once the leaders in sports drinks and New Age drinks, have recently been met by stiff competition from Coke and Pepsi, respectively with Powerade and Allsport, Fruitopia and Drenchers ("Irascible cola...," 1995). The addition of

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the percentage of carbonated drinks sold in convenience store dropped from 74.9% to 71.3%. Not insignificantly, the percentage on non-carbonated beverages sold over the same period rose by almost 4% (U.S. Distribution Journal, 1993). The consumer was clearly looking to find a product that was less costly, that was different, and a product that quenched his or her thirst. Current movement in the beverage industry is also tied to the introduction of New Coke nearly a decade ago. The New Coke fiasco brought the industry in contact with a tremendous demand for new flavors in ready-to-drink beverages. This can be linked to the New Age and still beverage craze, which Pepsi, Coke, and Quaker have now taken advantage of ("Coca-Cola's sweet...," 1995). New Age and so called "still water" beverages which consist of natural flavored sodas, sweetened and unsweetened waters, ice teas and coffees, are the products that the public is buying instead of colas. Quaker, Cadbury, Schweppes, Royal Crown, and all others which comprise a formidable block of 27.9% of the market share, (Market Share Reporter, 1995), are making use of so called New Age beverages, and are making inroads at the expense of the cola and diet cola markets ("Bubbles burst

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