Historically, of juices, coffee, tea and other non-CDS, hence,

Historically, the war was born with the series of
suits and countersuits between Coca-Cola and Pepsi in the 1930’s. Pepsi’s
market share began to grow and started a long journey in the beverage industry.
One of the most important points that the competition brought, is to break the
monopoly that Coca-Cola had in the CSD industry. The war escalated quickly with
Pepsi’s Steele statement “Beat Coke”, pushing both firms into coming up with
more innovation, turning to consumer-centricity and looking to increase its
market share. The war affected not only producers but bottlers also. After the
success of the “Pepsi Generation” campaign, Pepsi had huge initiatives to
improve its bottlers plants and modernize processes, while at the same time,
keeping prices lower than Coca-Cola. Even more, this war in specific took part
in broadening the range of CDS by the launch of sprite (7up), fanta and
mountain dew, increasing market shares, profits and popularity of these 2 firms
in the beverage market (with case volumes increasing of at least 1.5 times –
water from 3,221mn to 4,589mn – sports drink from 488mn to 843mn – etc.). To
add, the cola war escalated to a beverage war by the purchase and manufacturing
of juices, coffee, tea and other non-CDS, hence, transforming the industry from
a coke only to a large beverage based on synergies between plants and
manufacturers. In 1974, Pepsi was able to make Coke cut down prices and be more
aggressive and direct in advertising, creating a strong effect on both, Coca-Cola’s
profits and the industry’s harsh competition for the first place in
conglomerations. The “Pepsi Challenge” was a major breakthrough for the
industry, proving for both firms that there is no monopoly but a duopoly,
affecting prices, advertising strategies, and bottlers relationship. Back to
the push of new innovation and finding solutions and services for customers,
the introduction of the Diet coke in 1982 pushed the industry into a new
dimension, especially with the “coke” branding. This proved that not only the
brand name has reached high importance among customers, but also there is a
need for new products, hence, augmenting the firms’ market shares and profits.
In the whole CSD industry, the war has pressured smaller producers, during the
peak, the growth of Coca-Cola and Pepsi, their intensive sales and spending on
advertising and retail, have put some smaller firms’ products in the corner of
shelfs, hence, the firm itself in the corner of the industry. On the other side
of the production line, the war has highly affected bottlers in several ways. While
profit margins were clearly affected for Coca-Cola and Pepsi, it got severely
smaller for bottlers. Even more, producers were always managing to increase
prices and make consumers pay for it, while bottlers had to keep fighting to modernize
plants, advertise more, and keep their best places at retailers’ stores
(margins of 32% for producers compared to 8% for bottlers in 2009). Finally,
competing in this long-term war, and looking for every possible way to increase
profit and market share, Coca-Cola and Pepsi had to buy their smaller/weaker
bottlers, invest in them, and transform them in a growing regional asset. Even
though this cause increasing debts ($1 bn. For Coca-Cola) and more spending in
such project ($7 bn. For Coca-Cola in 1997), in quickly made larger sales, and
a growing profit.