Coke Vs Pepsi

Pepsi se dio cuenta mucho antes que Coca que la tendencia del mercado de refrescos carbonatados estaba en riesgo y que ellos necesitaban avanzar en snack y bebidas no-carbonatadas” explica Caroline Levy, analista que cubre el sector para UBS.

Durante más de una década Coca-Cola se embarcó en una estrategia dubitativa, siempre con tono vacilante y refugiándose en su liderazgo en los refrescos de cola sin darse cuenta que el campo de batalla había cambiado y la lucha hacía tiempo que se decidía en otras categorías.

En definitiva, Coca-Cola se durmió en los laureles de la categoría “bebidas de cola”, mientras dejó que su eterno competidor, Pepsi-Cola, la derrotara en el verdadero campo de batalla, y se convirtiera en la mejor compañía.

Can Coke and Pepsi sustain their profits in the wake of flattening demand and the growing popularity of non-carbonated drinks?

1. Why is the soft drink industry so profitable?

An industry analysis through Porter’s Five Forces reveals that market forces are favorable for profitability.

Defining the industry:

Both concentrate producers (CP) and bottlers are profitable. These two parts of theindustry are extremely interdependent, sharing costs in procurement, production, marketing and distribution.Many of their functions overlap; for instance, CPs do some bottling, and bottlers conduct many promotionalactivities. The industry is already vertically integrated to some extent. They also deal with similar suppliersand buyers. Entry into the industry would involve developing operations in either or both disciplines.Beverage substitutes would threaten both CPs and their associated bottlers. Because of operational overlapand similarities in their market environment, we can include both CPs and bottlers in our definition of the softdrink industry. In 1993, CPs earned 29% pretax profits on their sales, while bottlers earned 9% profits on theirsales, for a total industry profitability of 14% (Exhibit 1). This industry as a whole generates positiveeconomic profits.

Rivalry:

Revenues are extremely concentrated in this industry, with Coke and Pepsi, together with theirassociated bottlers, commanding 73% of the case market in 1994. Adding in the next tier of soft drink companies, the top six controlled 89% of the market. In fact, one could characterize the soft drink market as anoligopoly, or even a duopoly between Coke and Pepsi, resulting in positive economic profits. To be sure, therewas tough competition between Coke and Pepsi for market share, and this occasionally hampered profitability.For example, price wars resulted in weak brand loyalty and eroded margins for both companies in the 1980s.The Pepsi Challenge, meanwhile, affected market share without hampering per case

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