Marketing & Selling: Pepsi v. Coke

Next to the electric outlet, hardly any American invention is as omnipresent as ice-cold cola. In bottle, can, cup or glass, cola is drunk from White House to roadhouse, and few Americans can travel far at work or play without finding an automatic cola dispenser handy. In the huge industry that has grown up to satisfy this thirst, 77-year-old Coca-Cola is still by far the leader, with 1962 sales of $568 million and profits of $47 million. Coke’s closest competitor is Pepsi-Cola, which has closed part of the gap in the last decade by aggressive marketing but still trails Coke with 1962 sales of $192 million and profits of $15 million. Third in the field, but far behind both Coke and Pepsi, is Royal Crown, with 1962 sales of $28 million.

With Cola products now enjoying an unprecedented international boom, the industry’s two giants are busily scrapping for a bigger share of the growing market. This week Coca-Cola begins a $53 million advertising campaign in which its classic “Pause That Refreshes” will give way to what Coke calls a “one-sight, one-sound, one-sell” approach based on the slogan that “Things Go Better with Coke.” Fortnight ago at Pepsi—whose slogan is “For Those Who Think Young”—New President Donald Mclntosh Kendall, after only a month on the job, wielded a broom that swept out six vice presidents and will brush in a revamped, decentralized distribution system aimed at making Pepsi a more powerful challenger to Coke.

The Men & the Problems. Pepsi’s Kendall, a husky, hard-working onetime fountain-syrup salesman who tripled sales and quintupled profits in six years as Pepsi’s international president, has much in common with Coca-Cola’s President J. Paul Austin, who took over his company last year. Both have Southern ties: Kendall was a football tackle for Western Kentucky State College; Austin spent his early youth in LaGrange, Ga., before moving up to Harvard Law School. Both are unusually young to head major corporations: Kendall is 42, Austin 48. Both advanced up the corporate ladder through the export division, an operation that now significantly accounts for 41% of Pepsi’s sales and 42% of Coke’s.

When it gets down to the job each man faces, the similarities end. Besides trying to beef up Pepsi’s distribution and marketing system (520 U.S. outlets v. 1,100 for Coke), Kendall needs to broaden his one-product company, is searching around for likely food-line mergers. Austin, on the other hand, can look out from his executive suite in Atlanta on a far-flung organization that has already taken that step; in addition to Coke, he has a promising line of frozen and canned juices, coffee and tea that accounts for 20% of Coke’s sales.

Diversification is a relatively new concept for Coke. In the 30 years that rough and ready Robert Woodruff, 73, ran the company, Coca-Cola preened itself as a giant with a single product, a onetime cough elixir dispensed globally in wasp-waisted 6½-oz. bottles. Complacency caught up with the giant a decade ago; other companies made inroads with bigger bottles, and Pepsi even pulled ahead in some areas. Woodruff, whose position as chairman of the finance committee is buttressed by the fact that he owns Coke stock worth $30 million, was finally persuaded that the corporate horizon should be extended. Coke added larger bottles and cans, rapidly took on such sidelines as lemon-lime Sprite, twelve Fanta soft-drink flavors, Minute Maid juices and, this year, low-calorie Tab.

Uphill Run. Besides looking for more companies to marry into Coke now that diversification is the policy, Austin is concentrating on increasing Coke’s worldwide lead, searching for more outlets to add to Coke’s 1,850 distributors in 122 nations. “We stay scared and we run hard,” he says. Racing against that competition, Pepsi clearly is still running uphill, but it has developed a certain wind and toughness for the task. That toughness is apparent in Don Kendall, who opened a new plant every 11½ working days during two years of his tenure as international president, and has no intention of slowing down. Not for him the pause that refreshes.