Coca- Cola

Coca-Cola, or Coke, is a carbonated soft drink manufactured by The Coca-Cola Company.

Originally intended as a patent medicine, it was invented in the late 19th century by John Stith
Pemberton and was bought out by businessman Asa Griggs Candler, whose marketing tactics led
Coca-Cola to its dominance of the world soft-drink market throughout the 20th century. The drink's
name refers to two of its original ingredients: coca leaves, and kola nuts (a source of caffeine). The
current formula of Coca-Cola remains a trade secret, although a variety of reported recipes and
experimental recreations have been published.

Competitors
Pepsi, the flagship product of PepsiCo, The Coca-Cola Company's main rival in the soft drink
industry, is usually second to Coke in sales, and outsells Coca-Cola in some markets. RC Cola,
now owned by the Dr Pepper Snapple Group, the third largest soft drink manufacturer, is also
widely available.

Around the world, many local brands compete with Coke. In South and Central America Kola
Real, known as Big Cola in Mexico, is a growing competitor to Coca-Cola. On the French island
of Corsica, Corsica Cola, made by brewers of the local Pietra beer, is a growing competitor to
Coca-Cola. In the French region of Brittany, Breizh Cola is available. In Peru, Inca Kola outsells
Coca-Cola, which led The Coca-Cola Company to purchase the brand in 1999. In Sweden, Julmust
outsells Coca-Cola during the Christmas seasons. In Scotland, the locally produced Irn-Bru was
more popular than Coca-Cola until 2005, when Coca-Cola and Diet Coke began to outpace its
sales. In the former East Germany, Vita Cola, invented during Communist rule, is gaining
popularity.
In India, Coca-Cola ranked third behind the leader, Pepsi-Cola, and local drink Thums Up. The
Coca-Cola Company purchased Thums Up in 1993. As of 2004, Coca-Cola held a 60.9% market-
share in India.Tropicola, a domestic drink, is served in Cuba instead of Coca-Cola, due to a United
States embargo. French brand Mecca Cola and British brand Qibla Cola are competitors to Coca-
Cola in the Middle East.
In Turkey, Cola Turka, in Iran and the Middle East, Zamzam Cola and Parsi Cola, in some parts
of China, China Cola, in Slovenia, Cockta, and the inexpensive Mercator Cola, sold only in the
country's biggest supermarket chain, Mercator, are some of the brand's competitors. Classiko Cola,
made by Tiko Group, the largest manufacturing company in Madagascar, is a competitor to Coca-
Cola in many regions

Pepsi
Pepsi is a carbonated soft drink manufactured by PepsiCo. Originally created and developed in
1893 by Caleb Bradham and introduced as Brad's Drink, it was renamed as Pepsi-Cola on August
28, 1898, and then as Pepsi in 1961.
Coca-Cola Vs. Pepsi: Who Has The Best Business Model ?

Both companies have massive scale. With Coca-Cola over $35 billion revenue, compared
to PepsiCo over $63 billion. Where Coca-Cola has a large chunk of revenues in Europe, Middle
East, and Africa.
PepsiCo has its primary operations in the US. Coca-Cola is the largest beverage company in the
world. PepsiCo got diversified between beverages and food, where food represented 53% of
its revenues in 2017.
Both companies have massive distribution strategies and nonetheless the size, they have a
relatively quick decision-making process.
That is critical as both companies top into consumer habits, therefore need to be fast in adapting
to them. Both companies also spend massive resources on demand generation via marketing
activities.

Why Coke and Pepsi have a different business model

At first sight, Coca-Cola and Pepsi might seem to have a business model which not only are similar
but in a way compete with each other. While this is true, it is also true that those companies have
two different business model and a portfolio of products that in many cases doesn’t overall. Indeed,
we’ll see why, and in which respect Coca-Cola Company and PepsiCo business model are similar
and where they differ.

Product: where Coca-Cola is about beverages, PepsiCo is quite diversified

One aspect in which Coca-Cola and PepsiCo differ quite a lot is in their product offering. Where
Coca-Cola is primarily about beverages, PepsiCo is about both food and drink.

Coca-Cola Portfolio: from Coca-Cola Annual Report

 PepsiCo Portfolio: from PepsiCo Annual Report

Thus, while Coca-Cola is the largest beverage company in the world, PepsiCo has a vast array of
products ranging from food and beverage.
 If you look at the mix of revenues of PepsiCo, food represented 53%, while beverage represented
47%.
Therefore, where in the minds of consumer Coke and Pepsi might be perceived as direct
competitors, if we look at their business model look entirely different regarding product offering
and mix. Where Coca-Cola is a beverage company, PepsiCo draws its strength from offering
snacks, complimentary to soft drinks. This in a way allows PepsiCo to compete to Coca-Cola at a
better level. Imagine the scenario of a consumer buying a Coke and a packet of Lay’s potatoes.
 What Is a Business Model? 30 Successful Types of Business Models You Need to Know

Organizational structure: both are large yet efficient

When companies get too big, the risk is that they also get to slow in making a decision. However,
for companies, like Coca-Cola focus on the consumer markets, it is critical to have a lean decision-
making process, where layers of management need to be avoided.
Indeed, where the two companies too slow to adapt to consumer changing habits this would kill
the business model in the long run. For instance, both Coca-Cola and PepsiCo, as more consumers
perceive their products as unhealthy, they are focusing on diversifying their product portfolio to
have more “healthy” choices.
 PepsiCo change in portfolio composition

Distribution strategy: both Coca-Cola and PepsiCo distribution systems are

their key advantage

One of Coca-Cola key ingredient is its distribution system made of branded beverages available
to consumers in more than 200 countries through a network of company-owned or controlled
bottling and distribution operations, independent bottling partners, distributors, wholesalers, and
retailers. Coca-Cola has the world’s largest beverage distribution system. Also, PepsiCo has a
massive distribution system based on both manufacturing and licensing agreements with several
brands.

Both companies know how to tap into consumer habits

Demand creation is a crucial ingredient for any company that wants to access consumer desires.
However, that requires massive marketing resources and campaign to “enhance consumer
awareness” which in simple words means generating demands for their product portfolio. Coca-
Cola spent over six billion dollars in 2017 for promotional
and marketing programs. PepsiCo marketing activities amounted to over four billion dollars.
This process requires a rigorous brand positioning, developed around consumer insights.

Coca-Cola franchise leadership

Coca-Cola bottling partners is a crucial ingredient in its success. Coca-Cola also designs business
models in specific markets to be able to have maximum penetration.

PepsiCo digital strategy

PepsiCo is putting a massive effort in digital strategy to grow their brands. Some of those
initiatives include, as reported in PepsiCo financial statements:
 Frito-Lay North America is using Big Data to help make sure consumers can help find their
favorite snacks in local stores
 In India, PepsiCo set up a Digital Command Center to analyze links between consumer
behavior and business results
 In China, we leveraged social media to launch the latest “Bring Happiness Home” Chinese New
Year campaign, including a 20-minute video that generated more than 1 billion views
Those are some of the examples of how PepsiCo is doubling down on those initiatives.

Who has the best business model ?

In my opinion, and that is an aspect I like the most about any business model, I like the fact
that PepsiCo has a well-diversified portfolio between beverage and food. This allows the company
to tap into larger consumer pieces of the market, while it also manages to compete with Coca-Cola
at a larger scale. Where a consumer might prefer Coca-Cola beverages over PepsiCo, the company
can still leverage on its large snack portfolio to tap into the same segments of the
market. PepsiCo is swiftly moving toward “more healthy” choices and digitalization, by
leveraging on organic business growth.