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The Cola War: Coca Cola versus Pepsi

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  1. Reasons for profitability in soft work.
  2. Concentrate business VS bottling business.
  3. The consequences of the war between Coke and Pepsi on the industry.
  4. Can Pepsi & Coke sustain their profit in the wake of a flattening demand.
  5. Conclusion.
  6. Bibliography.

The soft drink industry is divided into two categories of product: the non carbonated soft drink and the carbonated soft drink (CSD). During the next 30 years, CSD consumption rose constantly and grew at an average of 3% per year. The consumption of CSD in USA is about 53 gallons per year! So the average consumption of CSD is very high and quite amazing. But since the beginning of the twenty-first century, the market of the CSD stops growing and became consequently less profitable. But fortunately, on the other hand, the market of non carbonated drink explodes. So thanks these new opportunities and the important consumption of soft drinks which rises constantly, we can say that nowadays soft drink industry is always very profitable and can induce huge profits. Otherwise, if this industry is so profitable it's because there are only few actors on this market. Indeed, Coca and Pepsi have almost the monopoly in the soft drink industry (In 2000, Pepsi and Coca made 76% of the total sells of soft drink).

[...] Indeed, Coca Cola and Pepsi represent 76% of the American market in 2000. The necessary infrastructures The infrastructures for the concentrate business are reduced but they are raised for the bottling business. For example, the US market needs only one structure (25 to 50 million each) for the concentrate producers. But concerning the bottlers, an important market like US market needs around 80 infrastructures (25 to 75 million each). The production cost The cost of production of the concentrate business is lower than the bottlers. [...]

[...] The Coca Cola Company has a strong brand image; it is an ?American Icon?. The coca Cola brand is a synonym of American culture since 1916. This popularity is indisputable, indeed Coca Cola is recognized everywhere around the world. Thanks an international implementation, Coca Cola is a premium brand on the international market. The firm has a closest competitor: Pepsi and its success provides to a long term rivalry between the two competitors. Indeed, when Coca launches a new product, Pepsi answers launching the same product. [...]

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