The 'Cola Wars' Between Coke And Pepsi Boiled Over Into A Personal Billion-Dollar Brawl In The '80s
Five simple words, "Rock and roller Cola Wars," can be found in the lyrics of Billy Joel's 1989 Grammy-nominated hit, "We Didn't Start the Fire." The song lists more than 100 prolific people and events from the second half of the 20th century, all of which told the story of his life. Part of that tale - one conflict influential enough to make the list - was the clash between soft drink rivals Coca-Cola and Pepsi.
Both Coca-Cola and Pepsi were invented during the late 1800s, and over the course of the 20th century they competed for dominance across the globe. Coca-Cola was the front-runner from the outset and remained the leader until the 1970s. As Pepsi pushed harder to seize control of the marketplace, Coca-Cola shoved back and, in true combat-like fashion, the Coke vs. Pepsi war was born.
The back and forth resulted in new products, celebrity endorsements, and increasingly extreme efforts to appeal to consumers, costing both sides millions of dollars in the process.
- Photo: Coca-Cola Co. / Wikimedia Commons / Public Domain
Coke And Pepsi Had Competed Since The 1890s, But Coke Was Always The Clear Front-Runner
Coca-Cola was invented in 1886 by Georgia pharmacist Dr. John S. Pemberton. A blend of carbonated water and sweet syrup, Coca-Cola was first sold as a fountain drink with wild success. According to the first advertisement for Coca-Cola in The Atlanta Journal that same year, it was, "Delicious! Refreshing! Exhilarating! Invigorating!"
As Coca-Cola's popularity grew, imitations emerged. In 1893, Dr. Caleb Bradham, also a pharmacist, developed "Brad's Drink" from sugar, water, caramel, and other natural flavors. In Bradham's native North Carolina, "Brad's Drink" was a hit. Five years later, Bradham changed the name of the drink to Pepsi-Cola.
Even with Pepsi-Cola on the market, Coca-Cola remained the most popular soft drink. The Pepsi-Cola Company, founded in 1902, struggled during the first decades of the 20th century, even declaring bankruptcy in 1923. But it rebounded, thanks to some restructuring, during the 1930s. Yet Coca-Cola continued to surge forward.
Over the course of the 1920s and '30s, Coca-Cola successfully marketed to children, adopting Santa Claus as a mascot of sorts and advertising in schools. By the start of World War II, Coca-Cola was also sold internationally and could be found in 44 countries.
The mid-20th century saw a shift in Pepsi's branding and marketing. The company adopted cans rather than bottles and targeted minority populations. Pepsi merged with Frito-Lay in 1965, hoping to further its presence in restaurants and supermarkets alike. Meanwhile, Coca-Cola launched new products - most notably Sprite, TaB, and Fresca - and continued to expand internationally.
By the 1970s, when Pepsi threw down the gauntlet with the Pepsi Challenge, Coca-Cola was still the front-runner in soft drink sales. However, it was slowly losing ground due to general brand stagnation.
In The '70s, The 'Pepsi Challenge' Dealt A Massive Blow To Coke And Sent The Company Scrambling
The Pepsi Challenge, first issued to consumers in 1975, escalated the modest rivalry between Coca-Cola and Pepsi. According to a former public relations vice president for Pepsi, Ken Ross, the company had very little to lose.
To conduct its challenge, Pepsi set up at shopping malls and comparable public sites and asked normal, everyday people to sample Pepsi and Coca-Cola in a blind taste test. Then they filmed the results. Though the test was simple, it was a revolutionary marketing campaign for the time - and it worked. The results indicated more than 50% of the tasters preferred Pepsi, a startling figure that sent shock waves through the Coca-Cola corporation.
Pepsi ads proclaimed victory, praising consumers for knowing "a winner when you taste one." According to Coca-Cola representatives, Pepsi had the odds in its favor simply because its product was slightly sweeter than Coke. With a higher sugar content, a sip of Pepsi was naturally going to appeal to tasters. Coca-Cola also saw the whole thing as unfair and generally just plain poor business practice.
In response to the Pepsi Challenge, Coke went out to get the biggest celebrity endorser it could find: Bill Cosby. At the time, Cosby was considered the personification of family thanks to his role on The Cosby Show. Cosby became the face of Coke and, as part of an early 1980s marketing campaign, "spied" on the Pepsi challenge tests. Cosby would pull out binoculars and point out the flaws in Pepsi's methodology, revealing just how much people loved Coke.
- Photo: The Coca-Cola Company
Coke Responded With The Introduction Of 'Diet Coke' And Some Other New Brands
As the Pepsi Challenge continued to play out in the media, Coca-Cola looked for new ways to assert itself in the marketplace. In 1982, Coca-Cola came out with Diet Coke (which was the first Coca-Cola product to use the "Coke" nickname). While Coca-Cola had released a low-calorie version of cola with TaB during the 1960s, it was largely marketed to women. Diet Coke was intended to be more appealing to men and women alike.
After Diet Coke hit the market, Coca-Cola followed it up with caffeine-free sodas. Though diet and caffeine-free products were no strangers to the market - Diet Pepsi was released in 1964 and Royal Crown's Diet Rite came out in 1962 - Diet Coke quickly became the most popular diet soda in the United States. It was the third most popular soft drink in 1984, falling behind Coca-Cola and the so-called "Uncola," 7UP.
Pepsi Positioned Itself As The Younger, Hipper Brand, And Landed Michael Jackson As A Spokesperson
Pepsi seized upon the notion that Coca-Cola was now passé. Pepsi CEO Roger Enrico wanted to reach out to young consumers and, with the help of entrepreneur Jay Coleman, linked popular culture and soft drinks. Coleman worked with Michael Jackson's managers to secure an endorsement deal.
Throughout the 1980s, Jackson cemented his title as the King of Pop. Thriller, released in 1982, went on to win eight Grammys and sell hundreds of millions of copies, and Jackson was in demand as a musician and endorser. Though first approached by Coca-Cola, Jackson and his team passed on the company's $1 million deal in favor of a deal with Pepsi in 1984.
The deal struck between Pepsi and Jackson - later revealed to be for $5 million - was touted as the "biggest personal endorsement deal in history" by the Guinness Book of World Records. Jackson was going to be the centerpiece of Pepsi's "Choice of a New Generation" campaign.
Unfortunately, while filming his second Pepsi commercial in 1984, Jackson was involved in a mishap involving pyrotechnics on the stage. Jackson experienced severe burns on his head, face, and scalp that would scar him for the rest of his life. Jackson's camp later released a statement that it was "an accident and [he] had no ill will towards anyone including Pepsi."
In Response, Coke Launched Its Secret 'Project Kansas'
Mishap aside, the partnership between Pepsi and Jackson was a success. Pepsi sales shot up as its commercials - which included Pepsi-specific lyrics set to the tune of "Billie Jean" - revolutionized marketing. Celebrities like Lionel Richie, Michael J. Fox, David Bowie, and Madonna all began aligning themselves with Pepsi, the soft drink of the "New Generation."
As Pepsi became associated with music, the brand also pushed for product placement in movies. Coca-Cola had always been dominant on the big screen but, as Pepsi began to usurp its position, the commercials themselves pushed Coca-Cola aside. One Pepsi commercial even featured an archaeologist holding a Coca-Cola bottle, implying a future where the brand ceased to exist.
Lines were being drawn, to the point that some consumers considered one brand or the other part of their identity. As one journalist and Pepsi-devotee Brian Junger dramatically put it, he didn't "want to know any Coke people... I'm surprised we didn't just divide the country and put our own sort of pop wall up."
Coca-Cola's response to Pepsi's gains was a complete redesign. Coca-Cola decided it was going to change its tried-and-true formula, and the goal of its secret "Project Kansas" was to find a new flavor. The codename, Project Kansas, was an homage to editor William Allen White, an avid Coca-Cola drinker who called the beverage "the sublimated essence of all that American stands for." (Arguably, White would not have considered a new flavor appealing.)
Coca-Cola made its product sweeter and tested it on consumers through a series of focus groups and surveys. Market researchers estimated the new and improved product would be well-received by the general public, though probably rejected by traditionalists. Coca-Cola was willing to take that risk.
- Photo: The Coca-Cola Company
In 1985, Coke Unveiled 'New Coke' And Officially Changed Its Formula
Coca-Cola released New Coke to the public in April 1985. The much-hyped flavor was supposed to be smoother and, now sweetened with corn syrup, closer to the taste of Diet Coke.
The idea of a new Coca-Cola product made Pepsi nervous. However, by announcing it was coming out with something better, Coca-Cola placed huge expectations on New Coke. As the public, media, and competitors waited for the drink, Coca-Cola remained confident about its success. At one press conference, Coca-Cola spokespersons called the rollout "the surest move ever because the consumer made it... we didn't." In other words, they knew "they had a winner."
Some onlookers were skeptical. Jesse Meyers, the publisher of Beverage Digest at the time, noted, "This has got to be the boldest consumer products move of any kind of any stripe since Eve started to hand out apples."
Coca-Cola bottler Bobby Pidgeon was more optimistic, stating, "I believe it'll do for brand Coca-Cola what Diet Coca-Cola did for the diet market."