the relationship between Pepsi and Coca-Cola
In the beverage industry, a constant war between Pepsi and Coca-Cola has occurred over centuries. The term cola wars were first used in the United States since the early 1980s due to the stiff competition between Pepsi and Coca-Cola (Yoffie & Renee, Harvard 2010). In the majority of countries, Coca-Cola is highly recognized and sold all over the globe (Paracha, 2017). During their reception, the two company focused their communication strategies or advertisements on positions. The existence of the brand relies on the presence of the other in the industry. Thus, without Pepsi, Cova-Cola would not have gained popularity nor recognition as a lively competitor and original brand. Pepsi’s presence in the industry highly influences the present-day success of Coca-Cola drinks as its major competitors (Herrmann, 2018). However, in the early 2000s, the relationship between Pepsi and Coca-Cola began to unravel (Yoffie & Renee, Harvard 2010). The declining U.S per-capita CSD consumption contributed significantly to the change in their relationship. As the two companies operate in the global market, they experience different challenges, including operational, branding strategies, and achievement of sustainable profitability and growth.
Beverage Consumption
According to Yoffie & Renee, Harvard 2010 exhibit list, in 1970, Americans consumed a total of twenty-three gallons of carbonated soft drinks. Since then, carbonated soft drink beverage sectors have been on the lead, while the least consumed beverage being distilled spirit. The position of carbonated soft drinks in the market and continuous increase in consumption is accelerated by the introduction of multiple in the flavors, increased CSD’s availability, and real price decline due to adjustment in inflation (Adachi, 2017). Despite the availability of other alternatives, such as bottled water, beer, wines, spirits, coffee, tea, juice, and milk, within the beverage industry, the majority of individuals preferred soda more than any of the listed drinks (Vojtovic, Navickas, & Gruzauskas, 2016). According to the exhibit list, since 2000, the consumption of carbonated soft drinks has significantly increased. In 2009, Yoffie & Renee, Harvard 2010 research suggests that an average American took the forty-six gallons of CSD’s in a year. Coca-Cola and Pepsi highly represent the beverage segment. From the list, it is assumed that a person’s average consumption of liquid drinks per day is one and a half gallons.
Market Shares Analysis
The global soft drink industry is controlled majorly by two players, namely Coca-Cola and Pepsi. Since 2005, Coca-Coca company has been leading, followed by Pepsi (Adachi, 2017). In 2009, the United Stated market sales volume of CSD of Pepsi and Coca-Cola, as national concentrate producers, totalized to seventy-two percent. They were seconded by Dr. Pepper and Snapple group. In market shares analysis, the Coca-Cola company is on the lead, followed by Pepsi, and then Dr. Pepper and Snapple group. According to exhibit two lists provided by Harvard Cold war’s 2010, in 2009, the Coca-Cola company had the highest market shares by unit case volume of 41.9 percent, followed by Pepsi 29.9 percent, and Dr. Pepper and Snapple group 16.4 percent (Yoffie & Renee, Harvard 2010). The concentration of the market shares amongst involved companies is affected by the individual’s ability to be creative in marketing and advertisement of their products (Maamoun, 2020, Sage Publication).
According to the data in exhibit two, despite having some years of decrease in shares, Dr. Pepper and Snapple group has a definite increase in market shares by unit case volume between 1970 to 2009. Pepsi (31.4-29.9 percent) and Coca-Cola (43.1- 41.9 percent) recorded a decrease in market shares between 2005 and 2009, while Dr. Pepper and Snapple had an increase (Yoffie & Renee, Harvard 2010). According to Maverick (2020), Coca-Cola had market shares of 42.5 percent, and the next market leader based on its growth trends is Dr. Pepper and Snapple group. However, to provide a detailed analysis and understanding of which company controls the market shares, attention must be paid to certain areas, such as drink types and products produced by given companies (Renfrew, 2016). The concentration of the market shares is driven by the introduction of new product lines and the adoption of new technology in production (Maamoun, 2020). Stiff competition amongst the three companies has also affected the market shares concentration. Generally, stiff competition has created a low concentration ratio of market shares.