Pepsi vs Coca Cola Hello again,
sure you have heard a lot of different stories about Coca Cola and Pepsi, here I am going to leave a video about how he started the Cola Wars to know is how this battle that has more than 100 years and extends throughout the world. CocaCola
pioneered the market, was established in 1886 in Atlanta, USA by John Pemberton, a pharmacist American who fought in the Civil War and after his addiction to morphine decided to create this drink that contained cocaine in its infancy. Four years later in 1890 another pharmacist, Caleb D. Pepsi created Bradham in New Bern, North Carolina (it was created by a worker Coca Cola discontent how many have), these drinks became popular in the 20's due to Prohibition, which prohibited the sale of alcohol in the United States.
The war between Coca Cola and Pepsi is a closely fought battle, in a sector with more than 48 billion U.S. sales $ n and where the average consumer drank over 48 gallons a year.
In 1993 Coke was the soft drink company the world's largest with a market participacón 45% and generated 80% of its profits outside the U.S. while Pepsi only won 15%
in 1970 was consumed in the U.S. an average of 23 gallons of soft drinks a year and this figure rose to 48 in just 23 years this was due to low prices and increased availability and purchasing power of diet drinks. At that time there were other types of drink besides soda and water, but these were the most commonly consumed and the consumption increased every year.
early 80's real prices fell, taking the 78 as the base year, the CPI rose by an average of 5'9%, 2'1 times that of soft drinks (3.8%) and found Consumer demand was elastic to prices. In 1992 the queues had dominated the soft drinks sector (68%), followed by lime (12%), spicy (7%) orange (3%), stout (2%) and other (8%).
concentrate producers
Soft drinks were composed of a base flavor, sweetener and carbonated water. The participants of the value chain were:
- concentrate and syrup producers. (PC)
- Bottling.
- Distributors.
packaging and bottling companies were major suppliers to the sector.
The PC mixing the ingredients except the sugar or syrup, aspartame except for light drinks and sent to the bottling, they add sugar or corn syrup to mixture. This process requires a low investment in machinery, overhead and labor. In 93 the construction of a manufacturing cost between $ 5 and $ 10 million, and higher costs of PCs were advertising, R & D, market research and relations with bottlers.
Marketing programs were implemented between the PC and the bottlers, the PC had leadership development programs, product planning, market research and advertising, while the bottlers in the development of trade and consumer promotions and pay a% agreed the promotion and advertising costs. The PC used much support staff Sales and Marketing to enhance the performance of its franchised bottlers, establishing standards and operating procedures, also negotiated with suppliers of sweetener and packaging, to ensure streamlined delivery at a lower price.
Between 80 and 90 increased the price paid by the bottlers for concentrate.
BOTTLING
would buy the concentrate, adding carbonated water, syrup and bottled or canned and shipped to customers. The Coca Cola and Pepsi bottlers offered a direct delivery service an the door (DPT), while smaller distributed to stores. This service included managing shelf space, advertising, brand, packaging and cleaning of containers, product display at point of sale.
The relationship between bottlers and retailers was crucial to the availability and ongoing maintenance of the brand through Cooperative Marketing Agreement (PCA) between retailers and bottlers to promote sales of soft drinks.
The process was capital intensive with high-speed dedicated lines, interchangeable similar packaging, the cost of the lines ranged from 4 to $ 10 million depending on the volume and type of packing, cost of a small plant 20 to $ 30 million and a large 5-line store large amounts of storage varied between 30 and $ 50 million to distribute throughout the U.S. About 80 plants were needed.
wrappers represented 49% of the costs, 35% concentrates, sweeteners, 12% Workforce most other variable costs. Also invested the distribution networks and the Gross Margin of the bottling exceeded 40%, but operating profits were minimal. The PC used
networks bottled under franchises owned a manufacturing and sales operation in a territory exclusive pequeño con plenos derechos.
en Coca Cola los derechos tradicionalmente no se extendían a las tiendas, era ella quien distribuía a los clientes . En los contratos originales el precio del concentrado era fijado a perpetuidad, con ajustes cada 3 meses y cambios en el precio del azúcar, sin obligación de renegociación por variación en los costes de concentrado, en el 78 Coca Cola lo modificó permitiendo aumentar los precios lo relativo al aumento del IPC y ajustar el precio trimestralmente por variaciones en el precio del azúcar, debido a esto estaba obligada a reflejar en el precio el ahorro de costes como resultado de la modificación de los ingredientes y permitiendo a las embotelladoras comprar el azúcar y the syrup on the market.
Coca Cola In 86 Botter proposed Master Contract that provided greater flexibility in pricing in 93 over 70% of the volume of Coca Cola in the U.S. was covered by the agreement, Pepsi also negotiated increases in the CPI. These agreements allowed
other bottled drinks that were not always PC queues and also decide whether to trade the new drinks PC, but could not negotiate with competitors. Were free to participate or refuse to introductions of new presentations, local marketing campaigns. The bottlers had the final say in deciding on price, packaging, sales and advertising, provided they were approved by the PC.
71 l In the Federal Trade Commission filed an action against the 8 major PC bottlers were more than 2 competing in the same territory, for the 80 PCs had to offer exclusive territories.
DISTRIBUTION
mid 80's the distribution of soft drinks grew food stores (42%), bars (20%), vending machines (12%) and others ( 26%), for 94 changed to 40% in shops, bars 17%, 8% in machinery, 14% petrol and conventional stores and 21% others in the group included other mass merchandisers or volume, circles or associations of shops and boutiques.
Benefits vary by retailer, the most profitable grocery stores were small circles of warehouses, machinery, conventional and Grocery Stores. The least Bars and great shopping. The benefits depend on the delivery method and frequency, the volume of demand, marketing campaigns. In 93
Pepsi and Coke Classic had a 16% by volume of the retail channel.
In 93 the main channel Supermarkets were distribution, were among the top 5 sales with a gross margin between 15 and 20% representing 4% of revenue, representing a large percentage of business, the companies are fighting for space to ensure visibility and availability of products and seeking new sites to increase sales, while industry sales declined due to industry consolidation and the introduction of private label.
retailers, warehouses and shops Circles sold 12%, and often have their own house brand, but brands delivered directly to stores, and obtained a greater margin. The retailer paid additional manpower, space, holding inventory and product costs, the extra costs reduced the net profit margin of the white mark.
had focused on Pepsi and Coke dominated retail sales in the sources (samples paid to the PC that barely covered production costs). In 93
Coke had a market share of 59%, while Pepsi had 27%, the competition was intense sources. In the accounts, the PC got margins of 2% before tax and used the sources to increase brand disponibilidadde, they were especially profitable for restaurants, because of the high margin. Coke and Pepsi invested in dispensers, glasses and advertising and promotion in order to increase local brand presence. They were the largest suppliers of soft drink machines to purchase and install the bottlers, and offering PC sales, the property owner obtained a percentage of sales.
SUPPLIERS
PCs and bottlers bought 2 types of product:
- Packaging: cans, bottles plastic and glass.
- Sweeteners: Sugar, syrup and aspartame.
In 93 to 55% of sales came from cans, 40% of plastic bottles and other glass bottles, cans having a low unit cost and that Russia was flooding the market with aluminum bottles plastic were introduced in 78 increasing domestic consumption Format 1 'and 3L.
Coke and Pepsi
negotiated on behalf of its bottlers and customers were among the largest in the industry, cans represented 40% of the total cost of the packaged beverage, so the PC negotiating with several suppliers .
60 and 70 in the Coca-Cola and Pepsi LP established relationships with suppliers ensuring the provision at this time the cans are viewed as commodities and 2 or 3 manufacturers competing for one contract falling margins.
Coke sweetened and sold its concentrate to bottlers, while Pepsi did unsweetened light for the NutraSweet Company negotiated with Holland Sweetener Company, at 92 won the patent for aspartame NutraSweet, so it was reduced price. In April and December of that year, Pepsi and Coke with NutraSweet signed contracts respectively. CocaCola subsequently transferred two-thirds of their savings to bottlers and Pepsi did the same pa not be disadvantaged, the war here began
WAR OF TAILS
Before 94, the soft drink industry in the U.S. was highly fragmented, this year from Pepsi and Coke had a collective market share of 73%, the 8 main PC (Coke, Pepsi, Dr. Pepper, 7-up, Schuepps, Royal Crown and A & W had the 89%, l rest were local brands and companies.
The war being waged in many frenes: Advertising, packaging and new products, brand recognition was the main competitive advantage, as Coke and Pepsi invested substantial and continuously on your mark. In 61 Coke launched Sprite and 63 Tab and Diet Pepsi countered with Pepsi and Mountain Dew in 64. Between 61 and 93 Coke and Pepsi launched 21 brands 24.
SURGE The duopoly
Coke and Pepsi was invented in late 1800, spread through a system of bottling franchises
