Coca-Cola vs Pepsi: A battle that changed the world 

Around August 1993, a half-page advertisement with the headline "Dehydrated? … There's always Coke" appeared in two of Thailand's leading English-language dailies, The Nation and the Bangkok Post.  

Although this may appear to be an usual advertisement for a carbonated soft drink at first glance, those familiar with the nearly century-old rivalry between Coca-Cola and Pepsi at the time must have realised that this headline was anything but normal, and that the former took a dig at its nemesis through this. 

In this particular instance, Coca-Cola took full advantage of the fact that Pepsi was sponsoring Michael Jackson's world tour, and the pop legend had to postpone a concert in Bangkok twice due to acute dehydration caused by the heat and humidity of the city. 

Pepsi, on the other hand, did not let it slide and, like a wounded lion going after its prey, hit back more fiercely at the first opening it found.

Seeing the popularity of the game in the South Asian region, both companies wanted to be the official sponsor of the 1996 Cricket World Cup.

Although Coca-Cola was able to claim the title of official sponsor, Pepsi completely turned the tables with its 'Nothing Official About It' campaign where the advertisements showed cricketers and even officials choosing Pepsi over Coke. 

This campaign was a first-of-its-kind example of ambush marketing in the region, and it captivated the public imagination to the point where "it was as if Coke threw a party and Pepsi gate-crashed and had a blast."

This was just one of many such instances where these two companies have gone at each other. 

In fact, their long-standing rivalry has been so intense that it has changed the course of history by influencing important political decisions and causing a paradigm shift in global consumer behaviour, among other things.

From the beginning, Coca-Cola performed relatively well and has successfully managed to become the domestic leader in this sector by the 1940s. 

However, Pepsi was struggling to keep itself in the competition due to bankruptcies in 1923 and 1932. But the game began to shift in favour of Pepsi, when the former marketing executive of Coca-Cola Alfred Steele became the CEO of Pepsi in 1950.

Aiming at family use, Alfred Steele decided to introduce Pepsi in 26-Ounce bottles. This strategy seemed to work for Pepsi, as other Cola companies, including Coca-Cola, typically used 6.5 or 12-ounce bottles in those days. 

After Alfred Steele, Donald Kendall became the CEO of Pepsi. During his tenure, Pepsi worked with its bottlers to improve and modernise its plants while also improving store delivery service. 

Under his visionary leadership, Pepsi merged with the snack food giant Frito-Lay to become PepsiCo. 

Targeting the young people through its aggressive marketing strategies, Pepsi soon, successfully, captured a large portion of the US domestic cola market. 

Meanwhile, Coca-Cola's excessive focus on overseas markets weakened the distribution network in the US market, which ultimately reduced its domestic lead to 2-1 to Pepsi.

Under the aggressive marketing strategy of Donald Kendall throughout the '70s and '80s, Pepsi introduced 'The Pepsi Challenge' in the Coca-Cola-dominated city Dallas in the Texas state in 1974. 

After demonstrating that Pepsi was better than Coca-Cola in this blind taste, they decided to hold this campaign in other places of the US as well. 

For the first time in history, Pepsi passed Coca-Cola by a 1.4 share point level in 1979. 

Coca-Cola responded by introducing Diet Coke in 1980-84, doubling their advertising costs, and instituting some management and policy reforms.

Despite its efforts, Coke was unable to reclaim its position. To make matters worse, they changed their original formula in 1985, which infuriated their loyal customers. 

Their outrage compelled Coca-Cola to reintroduce its old formula under the brand name 'Coca-Cola Classic' in just six months.

However, the blunder of Coca-Cola to change its formula proved to be a blessing in disguise for the company as after this incident, people started to consume Coca-Cola more than ever. 

Soon Coke's sale surpassed the sale of Pepsi. During this time, many Pepsi executives and business analysts labeled the incident as pre-planned by Coca-Cola policymakers.

In response to the rumour, Don Keough, the president of Coca-Cola at the time, stated in a famous interview, "we're not that smart."

Some prominent politicians in the US were also involved in the cola war and this added a new dimension to their rivalry. 

It began when Pepsi allegedly made Richard Nixon its brand ambassador during his tenure as Vice President (1953-1961). 

Later on, when he became 37th US president in 1969, he replaced Coca-Cola with Pepsi as the official drink in the White House. 

He helped Pepsi to grow before too, during his tenure as vice president. But the political and policy support during his tenure as president (1969-1974) helped 'Pepsi' to take a significant market share of 'Coca-Cola' not just in America but also in other countries. 

During this period, Pepsi also influenced different international political decisions taken by the US government. Like in 1973, an elected socialist government was ousted by a US-backed military coup. 

Later on, it was found that Pepsi, which was the leading cola brand of Chili at that time, expressed the need for US intervention in Chili to the then US secretary of state, Henry Kissinger.

However, the political fortunes of these two companies changed again after Jimmy Carter of the Democratic Party became president in 1977. He replaced Pepsi with Coca-Cola as the official white house drink. 

Although Pepsi was giving tough competition in the US domestic market during this period, Coca-Cola remained dominant in the global market due to its political support from the US government. 

Despite Coca-Cola's brand philosophy being much more conservative than Pepsi's, by the '80s Coca-Cola had become associated with the Democratic party whereas Pepsi maintained its relationships with the Republicans. 

The 2008 US presidential election again saw a change in the political ideology of the two companies when Pepsi was supporting the Democratic party's Barack Obama and Coca-Cola was backing Republican candidate John McCain.

But as more and more people began to abandon soda in favour of healthier alternatives, Coca-Cola and PepsiCo broadened their beverage portfolios, placing less attention on their primary brands.  

PepsiCo made a brilliant decision to focus more on producing a variety of snacks in the midst of this shift in consumer behaviour. 

Because of this bold decision, the company has been able to stay ahead of Coca-Cola during the ongoing pandemic.

As has been rightly pointed out by PepsiCo Vice chairman and CFO Hugh Johnston, "We have seen real increases in snacking. As a result, that demand is sustaining." 

"The beverage business is more challenging in that regard as the away from home channels have either shutdown and are quite limited," he added. 

Coke fans, on the other hand, will be relieved to learn that in March 2021, the company revealed that its global unit case volume had returned to where it was in 2019. 

"We are encouraged by improvements in our business," said CEO James Quincey, "particularly in markets where vaccine availability is increasing and economies are opening up."

However, this is by no means a permanent recovery. With the delta wreaking havoc all over the world, many countries are being forced to revert to a state of emergency and this could once again throw Coca-Cola into deep water. Indeed, this pandemic has tipped the scales in PepsiCo's favour, possibly forever.  

Sayed Arafat Zubayer is a student at Shahjalal University of Science and Technology in the Department of Economics.
Arafat Reza is a journalist.