After a century-long pitched battle with billions spent on advertising, taste tests, reformulations and several spectacular marketing blowouts, the Cola Wars appear to have fizzled out.
For sheer intensity, Coca-Cola’s rivalry with Pepsi is almost unparalleled in US corporate history. It not only defined the soft drink industry but set the standard for marketing and advertising across multiple sectors.
But their duopoly has been punctured by competitors and a booming energy drinks market.
According to US trade publication Beverage Digest, the top-selling soft drinks in the US in 2024 were Coke followed by Dr Pepper followed by Sprite (owned by Coca-Cola), with Pepsi trailing in a lowly fourth.
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Even outside the US, the Coke-Pepsi dynamic has waned.
According to Kantar’s latest BrandZ global rankings, Coke is still the most valuable soft drinks business with a brand value of $111.4 billion but Red Bull is now second with a brand value of $19.7 billion ahead of Pepsi on $16.8 billion.
Pepsi Challenge
The most famous passage of the Coke-Pepsi duel was in the 1980s when Pepsi decided to go after Coke’s dominant market position by trying to demonstrate its superior taste through blind tastings, the so-called Pepsi Challenge.
According to Pepsi, a majority of Americans chose its product over Coke and there was some truth to the claim.
Pepsi also enlisted the biggest star on the planet to endorse its product, Michael Jackson.
It began airing commercials with the tagline “the choice of a new generation”, featuring Jackson and his brothers dancing to a modified version of Billie Jean.
Pepsi’s marketing blitzkrieg worked. It began to eat into Coke’s market share. By 1983, it was outselling its rival in US supermarkets.
So flustered was Coke that it decided to reformulate its 99-year-old product despite marketing itself as “the real thing”.
In April 1985, it launched New Coke.
Despite performing well in taste tests, New Coke bombed. The public hated it and the backlash was instant. Protest groups formed. People hoarded old Coke. The company received over 400,000 letters of complaint.
Even Cuban leader Fidel Castro felt obliged to throw in his two cents’ worth, claiming New Coke symbolised “American capitalist decadence”.
Coke had spent four years and $4 million developing its new product and it died in 79 days. Three months after the launch, the company reintroduced the original formula, rebranding it Coca-Cola Classic.
New Coke continued as “Coke II” before being discontinued in 2002. It sits in the annals of marketing history as a cautionary tale about brand loyalty – as in, don’t mess with it unless you know what you’re doing.
Marketing gurus claim Coke’s misstep was trying to replace rather than add to its offering, a lesson that seems to have been taken on board given the proliferation of Coke varieties since.
But there was a sting in the tail for Pepsi. It may have won the battle but it seemed to lose the war. Coke sales spiked after the reintroduction of its original brand.
This prompted conspiracy theories which claimed that the removal and reintroduction of original Coke had been the company’s secret plan all along. “We are not that smart,” Coca-Cola president Don Keough said at the time.
Pepsi Paradox
Why people often chose Pepsi over Coke in blind tastings but preferred to buy Coke became known as the “Pepsi Paradox”.
One neuroscientific study indicated Coke’s branding exerted a stronger emotional response that effectively overrode the blind taste preference. Companies interpreted this to mean, advertising pays.
But it’s not as simple as that. In blind wine tastings, people tend to chose sweeter varieties because of the instant taste impact when in reality most people prefer dry wines.
Also the notion that Coke wins out because of superior marketing doesn’t explain the failure of New Coke, which had a significant marketing campaign behind it.
On branding, Coke and Pepsi are polar opposites.
Coke is the typical market incumbent, playing on tradition and nostalgia. It capitalises on the twee Christmas vibe with its “holidays are coming” adverts. Our rolly-polly image of Santa was shaped by Coke adverts in the 1930s.
Similar to the Apple/Samsung duel, Coke (like Apple) doesn’t mention its rival, and acts, in public at least, as if it’s the only show in town.
In contrast, Pepsi directly targets its main rival, even trolls it in viral adverts. The Pepsi Challenge is a case in point.
As the challenger brand, Pepsi’s advertising emphasises newness and youth. It has traditionally chased celebrity endorsements in an attempt to be “relevant”, a strategy that can – on occasion – backfire as model and socialite Kendall Jenner found out.
In 2017, a Pepsi advert featuring Jenner leaving a photo shoot to join protesters calling for love and peace before handing a can of Pepsi to a police officer was criticised as “privileged” and “tone deaf” and ultimately trivialising of campaigns such as Black Lives Matter. The backlash forced Pepsi to pull the ad.
Pepsi seems to rebrand every 10 years whereas Coke only tinkers with its public image. Maybe the New Coke fiasco has left scar tissue.
