Competition: Pepsi vs. Coca-Cola

The two major competive soft drink companies are Pepsi and Coca-Cola. The competition to attract more consumers to buy their products instead of the competition's resulted in a Cola War in the 1980s and is continuing to this present day. Over the last several years, Coca Cola has significantly outperformed PepsiCo. In fact since 2005, Coke’s stock price has gained 35%, while Pepsi only came up with a marginal 3% gain. However, in the current year, it is believed that the success is now turning in favor of Pepsi. Coca Cola’s market cap is currently 33% higher than Pepsi’s. The success in the higher stock prices were the result of several aspects. One of these aspects included good advertising to encourage consumers to buy Pepsi over Coca-Cola. Pepsi ads often focused on celebrities choosing Pepsi over Coke, supporting Pepsi's positioning as "The Choice of a New Generation." In 1975, Pepsi began showing people doing blind taste tests called Pepsi Challenge in which they preferred one product over the other. Coca-Cola thought the Pepsi Challenge ad was ridiculous because there is no way someone can tell the difference between Coke and Pepsi and therefore compared it in an ad with two chimpanzees deciding which tennis ball was furrier. Thereafter, Coca-Cola regained its leadership in the market. The back and forth battle will continue between these two companies because of the need to be on top in the market.