Coca-Cola vs. Pepsi

Coca-Cola has operated outside the U.S. since 1897. It has become the world’s best-known trademark. More than any other product – even Levi’s or McDonald’s Big Mac – it is an American emblem. According to Harvard Business School study, it is the second best-known word in the world – after OK.

Today Coca-Cola outsells Pepsi around 3 to 1 outside the U.S. The domestic race is closer, with a 41%-32% ratio in Coca-Cola’s favor. While Pepsi’s parent company makes most of its profit from its snack-food and restaurant

operations, Coca-Cola gains 80% of its operating profit from its overseas beverage business. Last year’s take in the international soft-

drinks race was $2.5 billion for Coke, vs. $112 million for Pepsi.

Coca-Cola can thank government for its success abroad. During

World War II, the U.S. military built more than 60 Coke bottling plants outside the U.S. to supply the American troops.

Pepsi got its international marketing break in 1959 when then chairman Donald Kendall handed Soviet President Nikita Krushchev a

bottle as cameras clicked: that gave the company an entrée into Eastern Europe. In 1972 Leonid Brezhnev gave Pepsi exclusive franchise in the Soviet Union.

Since the collapse of the Berlin Wall in 1989, Coca-Cola has moved

swiftly to overcome Pepsi’s edge in Eastern Europe. Coke claims the

lead in Hungary, Poland, Slovakia, Romania, Czech Republic. Pepsi is fighting especially hard in Russia and in the former Soviet Union Republics where it claims to retain the lead. Coke, however, now outsells Pepsi by more than 13 to 1 in Eastern Germany.

Pepsi reports its market share in Mexico has jumped from 28% to

33% during the past two years. With its $750 million investment Pepsi has doubled its plant capacity.

The Coke-Pepsi battle is still continuing. Both companies are going to make their products more available. They are also going to lower prices. That means more consumers buying more soft drinks. The average American consumes 720L of soft drinks a year – more soft drinks in fact than water. Non-Americans have a long way to go before they reach that level – and that would translate into booming business for the two giants.

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