This article is part of a four-part series about famous brand rivalries.
How Coke and Pepsi’s rivalry shaped marketing — and where it goes next
Sneaker supremacy: Nike and Adidas battle for brand love
Competition between brands is natural, but few rivalries are as ingrained in culture as the long-standing battle between Coca-Cola and Pepsi. Even people who have sworn off soda may hold an opinion on which label they align with. “Are you Coke or Pepsi?” is a question that frequently appears on personality quizzes, underpinning the significance ascribed to beverages that, in form and function, are largely similar.
With a relationship that predates the 20th century, Coke and Pepsi have played a pivotal role in shaping the contours of modern advertising, helping define what it means to be a brand. Similarly, Coke and Pepsi’s marketing spats have often mirrored broader social change and disruption, reflecting the cutthroat tactics of early packaged goods industrial expansion, the counterculture of the ‘60s and ‘70s, and in today’s world, the concept of brand purpose, where a company pursues a deeper set of values than peddling goods.
“As two of the prime consumer products in modern civilization, Coke and Pepsi have come to epitomize perhaps the central feature of all advertising, which is to provide the forum for placing social values and attitudes on a plane with material ones — be they goods, services, or money,” J.C. Louis and Harvey Yazijian write in their 1980 book “The Cola Wars,” an in-depth account of the formation of the two soft drink empires and some of their most iconic battlegrounds.
The ad landscape looks markedly different now than it did in the “Mad Men” heyday or the outsized aesthetics of the ‘80s. Today’s consumers have made it clear they don’t much like advertising, while flocking to channels where brand messages are easier to avoid. It’s hard to put on a compelling duel in the marketing arena if the stands are empty.
Public frustrations extend to more substantive business practices as well. As much as marketers were pressured for their role in the littering crisis decades ago, they now must contend with questions around sustainability, an area where food and beverage firms produce a massive amount of waste. An antagonistic rivalry might not be conducive to devising planet-saving solutions on this front, and even more lighthearted sparring — enabled by social media — carries a potentially unwanted edge in an increasingly divided society.
For Coke and Pepsi, the future could require a mindset that’s more hand-in-hand than head-to-head. That’s a difficult needle to thread as the war for consumer attention continues to evolve, jumping to nascent channels like gaming and the metaverse where brands are enacting another land grab.
“If you’re going to be competitive, if you’re going to be comparative, if you’re going to be head-on, there’s a lot at risk,” Susan Fournier, dean of the Questrom School of Business at Boston University, said of the Coke-Pepsi rivalry.
“We’re in a little bit of a pot-shotty, combative world,” Fournier said. “At some level, they’re playing back some kind of a zeitgeist again, but then it’s a matter of: Is that a zeitgeist I want?”
Getting to the roots
Coke and PepsiCo, Pepsi’s parent company, may be two multinational corporations whose reach and extensive product portfolios can make the mind reel, but their story is also one with a clear underdog. The disparities have stretched far back: Coke’s estimated marketing budget in 1939 soared into the millions, according to “The Cola Wars,” while Pepsi’s sat around $600,000. A follower status can have certain benefits, however, and Pepsi occasionally bills itself as a “disruptor” brand to this day.
“Pepsi has traditionally been the challenger in the relationship. Their ability to own this and flip it to their advantage leads to memorable breakthrough work,” Ben Phillips, group strategy director at the agency Mekanism, said in an email. Phillips praised a “More than OK” ad from 2019 that playfully riffed on a common question that servers ask diners who request Coke but are stuck with the alternative.
Coke, which was first sold in 1886, has rarely gone on the defensive, mostly because it locked in a leadership status early. Initial iconic advertising embodied classical Americana, with taglines like Archie Lee’s “The Pause that Refreshes” from the 1930s capturing the clean-cut, wholesome style popularized by artists like Norman Rockwell (Rockwell designed several ads for the brand). That positioning proved vital for Coke during World War II, when soldiers fighting abroad coveted the drink as a reminder of home and embodiment of what they were fighting for.
Pepsi, originally marketed as Brad’s Drink in 1893, was scrappier, more centered on value. It was also arguably more innovative on the marketing front. The soft drink marketer in the late ‘30s introduced a radio jingle harping on how consumers got more beverage volume for a cheaper price — which was true at the time — revolutionizing radio advertising in “one fell swoop,” per “The Cola Wars.” The earworm became a bona fide hit, broadcast from hundreds of radio stations and even the World Series.
“Good advertising in this rivalry is like bringing your sharpest knife to a gunfight.”
Group strategy director, Mekanism
While radio ads and jingles are no longer a game-changer in marketing, this strategy laid the groundwork for Pepsi’s identity in important ways that reverberate today, especially through the close association with music. The company for the past decade has sponsored the Super Bowl halftime show as part of an NFL deal reportedly valued at over $2 billion. The stage has captured the attention of tens of millions of viewers during TV’s most-watched event for years, shoring up Pepsi’s reputation for showmanship.
While the NFL deal is set to expire in 2022, Pepsi could still renew the agreement, as reported in CNBC. Even if it doesn’t, the brand left things off on a strong note, drawing raves for a Super Bowl LVI showcase that brought together Eminem, Snoop Dogg, Dr. Dre, Kendrick Lamar, Mary J. Blige and 50 Cent.
“Good advertising in this rivalry is like bringing your sharpest knife to a gunfight,” Phillips said.
“Pepsi [does] advertising, yes, but over the last few years they’ve dropped bombs in pop culture in ways that Coke [hasn’t],” he added. “I can’t think of a more memorable ‘brand activation’ than the Super Bowl halftime show this year.”
Culture wars on the soda stage
Of course, a rivalry doesn’t amount to much if it’s purely one-sided. Pepsi for years fought tooth and nail to carve out an edge against Coke. Coke resisted responding directly — doing so would admit Pepsi was a legitimate threat — though its awareness of the competition behind the scenes slowly grew. The marketer began inscribing the word Coke on its bottles in 1941, according to “The Cola Wars,” a sign of greater guardedness over its image after trademark disputes.
With the advent of TV advertising, and then the burgeoning counterculture of the ‘60s, Pepsi sharpened its attacks, with shots across the bow at Coke’s fustier image. In 1963, Pepsi announced it would put $36 million behind a new “Think Young” brand platform, its most extensive campaign to date, per “The Cola Wars.” A year into its run, the effort introduced the “Pepsi Generation” concept targeting pre-Vietnam youth, a landmark creative play that “was particularly useful in upgrading its image as a second-class product stemming from its nickel-value days,” Louis and Yazijian wrote.
Pepsi on the silver screen
Coke and Pepsi’s fight to win over the rebellious youth of the ‘60s and ‘70s took some interesting routes. Pepsi helped sponsor the 1964 film “For Those Who Think Young,” which mirrored the brand’s slogan at the time, “Now, it’s Pepsi for those who think young.”
Hollywood ambitions echo into the modern day. Pepsi in 2018 released a feature film based on its Uncle Drew character, an old-timer who’s surprisingly skilled on the basketball court and is played by NBA star Kyrie Irving in heavy makeup.
The movie made over $15 million during its opening weekend at the box office.
Coke and agency partner McCann Erickson in 1971 devised their own angle to appeal to a younger, more global consumer base. The result is considered one of the greatest commercial advertisements of all time. Known as “Hilltop,” the spot depicts a group from diverse backgrounds gathering on a hill, Coke bottles in hand, and joining in on a song about wanting to “buy the world a Coke.”
“It was like the culture war playing out on a soda stage,” Fournier said. “That’s really where it cements as not just the choice about taste.”
Pepsi’s success aligning itself with youth culture endures, but has occasionally become a liability. With the stronger emphasis on brand purpose that started taking hold in the 2010s, marketers have chimed in on thornier discussion points in politics and social issues. Pepsi in 2017 ran a spot that showed Kendall Jenner, of Kardashian family fame, quelling rising tensions between a gathering of police and protestors by passing along a can of Pepsi — an obvious bid to tap into discussions around Black Lives Matter.
The work was a disaster, widely decried as tone-deaf, and turned into a target of mockery on platforms like Twitter. It plunged perceptions of the brand to a 10-year low and was pulled from air within a day. The ad arguably looks even more poorly conceived in the wake of mass protests over police brutality in 2020 and serves as a case study of how social media can amplify marketer missteps and humble companies that once won favor using now-dated tactics.
And while taste isn’t everything, it would ultimately enshrine Coke and Pepsi’s rivalry in marketing. Pepsi’s rising confidence went a step further with the rollout of the “Pepsi Challenge” in 1975. The idea was both simple and ingenious: The brand set up blind taste tests where the majority of consumers participating said they preferred the taste of Pepsi to Coke.
The upstart soda marketer suddenly had fodder that would fuel its marketing strategy for years. Pepsi finally topped Coke in corporate sales in 1979, though Coke had much stronger profits, according to “The Cola Wars.” Regardless, there was a sense of a leveling playing field that would throw Coke into a panic.
“The big blunder, strategically, was that Coke bought Pepsi’s story that the battle was about taste, which it wasn’t,” said Priya Raghubir, a professor of marketing at New York University’s Stern School of Business. “They forgot their strength and they played on Pepsi’s battlefield.”
Coke, unaccustomed to adopting a reactionary stance, didn’t impress with its responses to the “Pepsi Challenge.” One ad stated that a third of consumers prefer Fresca — a Coke-owned brand — to Pepsi, a statement acknowledging that two-thirds of people still enjoyed Pepsi, per “The Cola Wars.”
Sweatiness over the “Pepsi Challenge” served as a precursor to the most egregious product miscalculation in Coke’s history. After seeing its share of the market slip, the company in 1985 decided to reformulate its beverage. The refreshed product, informed by extensive market research and positioned as an intelligent risk by then-CEO Roberto Goizueta, was dubbed “New Coke.”
The mind behind New Coke
Roberto Goizueta, CEO of Coca-Cola and the mastermind of New Coke, insisted there were no sacred cows at the company. His background as a chemist and R&D leader helps explain how he miscalculated the stock people put in the brand as it existed beyond the flavor profile.
However, New Coke did little long-term damage to Coke’s bottom line and Goizueta remained at his post until his death in 1997. The business school at Emory University has born his name since 1994.
New Coke ultimately didn’t appear to bring some needed scrutiny to the market research-driven approach that informed its creation in the first place.
“I don’t think market research has really learned the lesson that Coke’s market-research debacle should have taught them,” said Priya Raghubir of New York University’s Stern School of Business.
It did not go over well. According to Coke’s own account, a consumer help hotline went from receiving 400 calls a day to 1,500, the lion’s share complaining about New Coke. The original Coke, or Classic Coke, returned to shelves just a few months later.
Coke had learned the hard way that people bought its product not just for the taste, but also for the associations the soda carried. In this way, the company came to understand that “brand” was a distinct concept from raw product, though this would hardly be the last time Coke toyed with its flavor profiles. New Coke remains a touchstone for how not to reformulate a product.
“When people are called loyalists, they’re loyal to the brand, even though they may not be able to differentiate between the tastes of brands,” Raghubir said.
Many of Coke and Pepsi’s marketing mandates are the same in 2022 as at the height of the Cola Wars, particularly in the chase to win over the next generation of consumers. This has always been a challenging prospect but carries additional complexities today.
More people have gravitated away from sugary beverages amid concerns for linkages to obesity and other health problems. Staple media formats that were once guaranteed to reach millions of eyeballs like TV commercials are less of a sure bet, while advances in digital technology have put a focus on personalization and measurement that is difficult to realize.
The dual forces of quickly shifting consumer tastes and media consumption habits — both amplified by the pandemic — have led to bolder experiments. Both companies entered the health crisis in 2020 on uncertain footing, with the mass closure of on-premise venues like movie theaters upending their business. But COVID-19 led to a larger reckoning with product portfolios, such as Coke’s move to cull “zombie” brands and recenter around its core beverage offerings. Streamlining has paid off: Coke posted a blowout first quarter in 2022 despite price hikes tied to inflation, while Pepsi similarly beat Wall Street’s estimates.
Continued marketing innovation could help sustain momentum moving forward. Coke in March signed on as a founding partner of Wild Rift Esports, a major bet on the sponsorship potential of professional mobile gaming. Gaming has factored more heavily into marketing initiatives like a global “Real Magic” brand platform the company implemented last year.
An eye on nascent digital channels ladders down to product development as well. Coke earlier this year launched a Creations platform that will see the company introduce limited-edition sodas that embody a concept rather than a traditional flavor. A recent offering was meant to taste like computer pixels, a nod to growing traction for the metaverse, and was promoted in the online game Fortnite — a favorite among Gen Z.
Pepsi is vying for a big hit of its own with the nitrogen-infused Nitro Pepsi, which the company bills as the biggest innovation in the soda category in years. A campaign accompanying the national rollout in March stars the popular TikTok comedian Khaby Lame. Like Coke, Pepsi is trying to find its place in the metaverse through formats like non-fungible tokens (NFTs). Its first NFT drop in December referenced its founding year and rich history with music.
“Both of these brands want to be ‘experience makers’ now,” Lucien Etori, vice president and executive strategy director at agency R/GA, said over email, adding that those strategies are playing out in mobile, and increasingly, unproven channels like gaming and the metaverse.
“This is significant because both of these brands are very much looking to establish their bona-fides with the digital natives,” Etori added.
Even as the competition remains fierce, Coke and Pepsi share common shortcomings that may be easier to address together. Both have been grilled for their contributions to plastic waste as sustainability becomes a more pressing consumer concern. A recent Coke PSA that emphasized the need to recycle, with Bill Nye as an animated spokesperson, sparked outcry from critics who noted Coke generates millions of metric tons of virgin plastic each year.
Cross-industry solutions might be necessary if soft drink marketers want to hold onto public favor in the years ahead and prevent internecine squabbling that could eat into profits. Coke, PepsiCo and Keurig Dr Pepper in 2019 joined forces on an Every Bottle Back program that seeks to substantially reduce plastic waste in the U.S. Meeting those goals will require greater innovation and maybe a healthier form of rivalry than what’s manifested in the past.
“[It’ll] be a race to see which of the two will be the industry flagship when it comes to driving growth with forbearance and with a conscience, who will push the boundaries of what’s possible when it comes to packaging innovation, who can offset the most carbon and who can give back to local communities in the most significant way,” Etori said.