Coke vs. Pepsi: The Story Behind the Biggest Marketing Rivalry in History
Billy Joel’s classic, chart-topping ‘80s hit “We Didn’t Start the Fire” makes reference to “rock and roller cola wars,” a nod to the infamous marketing battle between Coca-Cola and Pepsi. Even if you’re not familiar with this particular tune, it’s safe to assume you’re well aware of the way these two iconic brands fight tooth-and-nail to dominate the beverage market.
The best way to really understand this legendary rivalry – and learn some lessons from it – is to dive into the story behind the Coke vs. Pepsi marketing match-up. Without further ado, here’s a closer look at how these two beverage giants have competed, failed, succeeded, and evolved over the years.
Coca-Cola traces its history back to 1886. That’s when a pharmacist in Atlanta, Georgia named John S. Pemberton created what was originally a bottled medicine. North Carolina pharmacist Caleb Bradham introduced what was first called “Brad’s Drink” in 1893. It officially became Pepsi – from a Greek word meaning “digestion” – in 1898.
By the time Pepsi came along, its rival was already selling more than a million gallons of its product per year. Coca-Cola also had the first celebrity endorsement. In 1900, singer and actress Hilda Clark was featured in Coke’s ads (some of which were on tin trays – an early form of practical product promotion) as the 20th century began.
By 1910, Pepsi had franchises in 24 states. Around this time, the company was selling around 100,000 gallons of its product per year. Meanwhile, Coke was continuing with its use of notable personalities in its various ad campaigns. The most popular ads featured top athletes of the day, often baseball players.
Coca-Cola was the first of the two companies to expand outside of the United States when a plant was opened in the Philippines in 1915. By the time the Roaring Twenties came along, Coca-Cola was also establishing a presence in Europe. In the late ’30s, the company further expanded its marketing reach to Australia and South Africa.
The whole Coke vs. Pepsi battle almost became a mute point when World War I sugar rationing forced Pepsi to go bankrupt in 1923. About five years later, the company was sold and relocated to Virginia. After a second bankruptcy in the early 1930s, things began to
look up for Pepsi, which found success by emphasizing value and affordability – bottles were five cents each.
A review of the Coke vs. Pepsi marketing feud isn’t complete without a look at each brand’s now iconic logos and the colors used. After all, there is something to be said for the psychology of color in marketing. For this reason, both Coke and Pepsi put careful thought into the colors associated with their respective brands.
Pepsi’s first logo used in 1898 included a splashy, difficult-to-read font that was gradually tweaked over time to make it stand out more. The logo most people associate with this beverage debuted in the 1940s during World War II. The company opted for a red, white, and blue color combination to capitalize on the strong feelings of patriotism that dominated the country.
Coca-Cola’s well-known red background color first appeared as the backdrop for its white lettering in the late 1940s. The company used this combination in all its advertising to boost its brand awareness and recognition. But it was Coca-Cola creator Dr. Pemberton’s bookkeeper, Frank M. Robinson, who created the brand’s famous script logo in the late 1800s. The company’s contour bottle debuted in 1915, and the wave came along in 1969.
During the early years of the Coke vs. Pepsi match-up, Coke had the edge thanks to a series of memorable and impactful ads. However, Pepsi soon countered Coca-Cola’s successful ad campaigns of the 1930s and ’40s with the debut of the advertising jingle.
In 1939, Pepsi created what’s considered the first ever advertising jingle. Originally named “Nickel Nickel” to reflect the affordable price of the company’s primary product, the tune was soon re-named “Pepsi-Cola Hits the Spot.” More than a million copies of the jingle were placed in jukeboxes across the United States.
Another aspect of marketing is knowing whether or not you can justify upping your product’s price. During World War II, Coke developed a reputation for its nickel bottles – so much so that the term “nickel Coke” was commonly used in everyday conversation.
But when the war ended, the company felt it had a marketing presence that was strong enough to justify a price increase. Around the same time, Pepsi started selling its beverages in cans.
Fun Fact: Pepsi also made the wise decision to purchase a sugar plantation in Cuba in 1940 to avoid any more issues with sugar shortages!
Coke-Cola was quick to take advantage of the emerging power of television in the 1950s. On Thanksgiving Day, 1950, the company broadcast a half-hour commercial on CBS. The company also debuted its own radio-friendly ditty, called “Coke Time,” in 1953.
Meanwhile, Pepsi’s President at the time, Al Steele, decided to shift the company’s advertising strategy. His wife, actress Joan Crawford, suggested making Pepsi more of a lifestyle brand rather than one that emphasized value.
This shift in strategy was reflected in Pepsi’s early TV ads in the 1950s. They often featured well-dressed couples in elegant settings. Some of the company’s TV ads from the time also showcased how it offered a high-quality drink that was perfect for the whole family.
To further emphasize the “elegance” of Pepsi, the company introduced a swirl bottle in the late 1950s. This was coupled with a successful “Be Sociable, Have a Pepsi” campaign that combined TV ads with radio spots and print ads.
By the 1960s, both Coke and Pepsi were distributed in more than a hundred countries around the world. During this time, Pepsi opted to tap into the youth market by dubbing itself as the brand for “those who think young.” The company would continue its youth-focused advertising well into the 21st century.
Another important aspect of the Coke vs. Pepsi marketing battle is the product choices each company has offered over the years. Coincidentally, both companies took steps to present more options other than cola to customers starting in the 1960s.
Coke’s big move was the purchase of the Minute Maid Corporation in 1960. Sprite, the company’s most successful spin-off product, was launched in 1961. Pepsi would later acquire the international distribution rights for 7-Up, Sprite’s main competitor beverage, in the mid-1980s – although Dr. Pepper owns the U.S. rights.
In 1964, Pepsi gave its health-conscious customers a sugar-free option with Diet Pepsi. Coke countered this move with the launch of Fresco, a diet grapefruit citrus soft drink, in 1965. Diet Coke wouldn’t come along until 1982.
Pepsi made a significant purchase of its own in the ’60s. In 1965, the company merged with Frito-Lay, Inc. to form PepsiCo, Inc. The company used this newly formed partnership to give cola lovers a perfect companion for their Pepsi – Doritos! This was also the time Pepsi began marketing to the “Pepsi Generation,” referring to younger beverage consumers.
As far as the Coke vs. Pepsi battle goes with brand expansion, it’s essentially a tie. From a strictly by-the-numbers standpoint, Coke is the winner since the company now owns more than 15 brands – including Hi-C, Dasani, and Bimbo Bakeries.
Pepsi, on the other hand, has largely focused on complementing its core beverage business with snack food offerings. Lays, Ruffles, Cracker Jack, Quaker, Rice-A-Roni, and Life (the cereal) are just some of the many well-known and highly profitable food-based brands owned by PepsiCo.
Coke experienced an epic product fail in 1985 when the company decided to tinker with its classic formula and debut New Coke. The massive public backlash resulted in the quick return of the company’s original, beloved formula. While this was a big PR disaster for Coke (some marketing experts have even dubbed it the “biggest marketing flop of all time”), the company was able to come out of this whole marketing mess pretty much unscathed.
Another marketing tactic both companies have used successfully over the years is product placement – a marketing technique that traces its origins to the late 1920s. The most obvious example of this is the 1961 movie “One, Two, Three,” in which James Cagney plays a high-ranking executive in the Coca-Cola Company.
Ironically, the movie ends with the newly promoted exec using one of the company’s airport vending machines to pass out Cokes to his family to celebrate. He then discovers that it’s actually stocked with Pepsi!
Coke’s first movie appearance, however, was actually in the 1946 holiday classic “It’s a Wonderful Life.,” where it can be seen on a store’s shelf.
By the 1960s, Coca-Cola products were being displayed in some way in so many films that the company opened an L.A. office to ensure authenticity with how its brand was represented. For instance, if a movie was set in an earlier time period, Coke would make sure the advertising depicted was in line with what was used during that time.
Flash forward to the 1980s and Pepsi would score a product placement coup of its own with a notable mention in “Back to the Future” (“Gimme a Pepsi Free…”) and a prominent appearance in the 1989 sequel. On the flip side, the Man of Steel crashed through a Coke billboard in 1978’s “Superman,” and in “E.T.,” the highest-grossing movie of all-time at one point, the title creature opened a can of Coke. The company’s beverage was also a major part of the plot of the 1980 cult classic film “The Gods Must Be Crazy,” where a Coke bottle tossed from an airplane triggers a series of events.
The two cola giants spent most of the ‘70s extolling the many wonderful virtues of their products in various ads. Coca-Cola earned praise for its mid-1970s hilltop ad (a.k.a., “I’d Like to Teach the World to Sing in Perfect Harmony…”), and Pepsi was encouraging people to catch that “Pepsi spirit.”
Starting in the 1980s, however, Coke and Pepsi duked it out with big- time celebrity endorsements, hence the reference to “rock and roller cola wars” by Billy Joel in his late ‘80s hit. Michael J. Fox and Michael Jackson did a series of popular Pepsi ads as well. The cola company also sponsored Jackson’s highly successful Bad Tour.
Despite a high-profile misstep with Madonna in 1989, Pepsi has continued to attract big-name pop stars for its ads. Other notable names have included Britney Spears, Shakira, Katy Perry, Beyonce, Ricky Martin, and Ne-Yo.
Whitney Houston famously sang her heart out for Coca-Cola in the late 1980s. The cola company would also have success with high-profile ads featuring Paula Abdul and Elton John, Will i. Am, Maroon 5, and Selena Gomez. However, Pepsi is often considered the overall winner with celebrity endorsements if you go strictly by star power and buzz-worthiness.
But with sports, it’s pretty much even. Both companies have sponsored a slew of major sporting events over the decades. And since 1928, Coca-Cola has been associated with the Olympics, and Pepsi has a long-term deal with the NFL.
Not surprisingly, Coke and Pepsi both became highly active online, especially when social media marketing became a thing. To be fair, both companies have had their share of social media highs and lows. But when it comes to online engagement, Coke is the big winner with Facebook fans and Twitter followers.
Let’s wrap up this Coke vs. Pepsi summary by taking a look at some cold, hard data. With the bottom line, both companies have seen revenues steadily spike since around the mid-1980s and forward.
Because Coke has primarily stuck with beverages and Pepsi has had a very lucrative foray into the snack food business, Pepsi has a slight advantage with stock values. Also, Coke earns about $35 billion in revenue annually, while Pepsi generates nearly $60 billion annually – again, largely because of an expansion beyond the beverage market.
Coke actually out-spends Pepsi on advertising ($2 billion to $1.1 billion). This likely explains why Coca-Cola tops Pepsi with market share by about 10 percent. Such figures would seem to suggest that Coke is the winner. This isn’t necessarily the case, however, since both companies have different marketing goals and different definitions for what “success” means. This is also a reminder that marketing decisions for any business or brand should be driven by clearly established goals.
Even if you aren’t exactly in a “Coke vs. Pepsi” size battle with your competitors, there are plenty of lessons to be learned from this recap of the legendary marketing rivalry between these two brands. First, really understand your market and target audience. Second, check out what your competition is doing and make an effort to do it better. Third, look for smart ways to carve out new niches for your brand. And last, but certainly not least, pay attention to what matters most to your customers!
Of course, great content is just as helpful when it comes to anything marketing-related. This is especially true with anything that’s presented online. One final lesson to be learned here – you don’t necessarily have to win the marketing war with your rivals to reap the rewards of increased brand awareness. After all, both Coke and Pepsi are the two most recognized beverage brands in the world.