Coca-Cola Vs. PepsiCo: Difference in Their Business Model

Jan 22, 2021 8 min read
Coca-Cola Vs. PepsiCo: Difference in Their Business Model

There are hundreds of beverage brands offering a variety of drinks to consumers. But PepsiCo, Inc. and Coca-Cola Co. are leaders in the global beverage industry. They are the world's largest beverage manufacturers. Their business models are similar in terms of flagship products and ideal consumers and industry.

The Coco-Cola company was founded in 1892 with its headquarters situated in Atlanta, USA. The PepsiCo Company was founded in 1898. At that time, its name was Pepsi-Cola. The company merged with Frito-Lay, Inc. in 1965. After that, its name changed to PepsiCo. The headquarters of the company is situated in New York, USA.

PepsiCo operates several brands including Tropicana, Frito-Lay, Gatorade, Quaker, etc. The world's top soft drink brands, such as Coke ย Sprite, Fanta are the brands owned by Coca-Cola company. We can find so many key similarities and key differences between these two business models. The comparisons between these two business models are given below. Also, we've listed the pricing strategies of coca-cola and PepsiCo and the Marketing Strategies of Coca-Cola and PepsiCo.

Coca-Cola Vs PepsiCo: Strengths
Coca-Cola Vs PepsiCo: Weaknesses
Coca-Cola Vs PepsiCo: Business Model
Coca-Cola Vs PepsiCo: Pricing Strategy
Coca-Cola Vs PepsiCo: Marketing Strategies
Coca-Cola Vs PepsiCo: FAQs

Coca-Cola Vs PepsiCo: Strengths

Pepsi has a brand value of over $18.2 billion and has ranked 36th in the most valuable brands in the 2020 list prepared by Forbes. Sales of beverages and snack foods of the company are coming under one umbrella. It made PepsiCo a diversified and stronger business. It's 54% of revenue is from the food business and the remaining 46% is from the beverage industry.

Marketing Strategies of PepsiCo
Products of PepsiCo

The company has 22 brands, including Pepsi, Fritos, Doritos, Pepsi Max, Diet Pepsi, etc. Each one makes more than $ 1 billion annually from sales. PepsiCo has a strong global presence in more than 200 countries around the world. It utilizes Direct Store Delivery (DSD) for its distribution network and supply chain. So the distributors deliver snacks and beverages directly to small stores.

The target audience of PepsiCo is the younger generation. They stand as a brand for the youth. To face the challenges and to increase resource sustainability, the PepsiCo Company works with so many community-based organizations.

In the case of Coco-Cola, it has strong a and unique brand identity. In 2011, it got the "highest brand equity award" from Interbrand. The company has a larger global presence. They are selling products in more than 200 countries. They also sell 9 billion products per day.

Customer loyalty is another strength of Coca-Cola. They are one of the most emotionally connected brands in the US. It is difficult to find substitutes for them. Coca-Cola has the 3rd rank in the Best Global Brand list annually prepared by Interbrand. According to Forbes List of Most Valuable Brands, it ranked 6th with a brand value of $64.6 Billion in 2020. Also, it has more market share than PepsiCo in the beverage industry.

Diet Coke, Sprite, Limca, Maaza, and Fanta are the top growing brands of Coca-Cola. The distribution network of the company is more extensive and efficient in the world. They have almost 250 bottling partners. In 2016, Coco-Cola acquired the largest soy-based beverage brand in Latin America named "Ades" and expanded its beverage portfolio through this.

Hereโ€™s What No One Tells You About Business Model Of Foodpanda
Foodpanda is an online food ordering mobile app that connects users to thousandsof local food points. Users can browse through various menus and place ordersfor home delivery or pick up at the best price. You can order from a widevariety of delicious food with just a few clicks. Foodpanda offeโ€ฆ

Coca-Cola Vs PepsiCo: Weaknesses

PepsiCo is over-dependent on soft drinks and packaged foods. It decreases the agility and flexibility of the company. Most soft drinks of PepsiCo are high sugar concentrations and its snacks contain chemical additives. It is not good for your health. Unsuccessful PepsiCo products, such as Pepsi Blue, Crystal Pepsi, etc. have made employees frustrated, and it allowed the growth of competition.

Companies must use their highest position to achieve the common good of society. But in 2017, PepsiCoโ€™s advert featured by Kendall Jennifer received criticism. That advert trivialized the Black Lives Matter movement.

Marketing Strategies of Coca Cola
Products of Coca-Cola

Coca-Cola's biggest competitor is Pepsi and it is preventing them from becoming a leader in the beverage market. In the case of Coca-Cola, the product diversification of the company is very low. They are lacking in the snack food category. At the same time, PepsiCo presented snacks items like Kurkure and Lays. This puts Pepsi ahead of Coca-Cola.

Carbonated beverages are one of the main sources of sugar consumption. It causes health problems such as diabetes and obesity. Coca-Cola is the largest producer of carbonated beverages. Most health experts give advice to decrease the use of soft drinks. The company hasn't found any solution to this problem yet.

Coca-Cola Vs PepsiCo: Business Model

Coca-Cola Business Model -

The business of the Coca-Cola Company has been weakened because of the Covid-19 epidemic. Coca-Cola reported that they have revenue of $8.60 billion in the first quarter of 2020. They stated that the closure of stadiums, cinema theaters, and restaurants because of the coronavirus pandemic has affected the company.

Business model of coca cola
Coca Cola Business Model

The volume of Coca-Colaโ€™s unit cases had a 3% increase at the end of February, except in China. During March, the demand for beverages from e-commerce channels and grocery stores increased in the market. Products like Simply Orange juices and Minute maid had higher sales before the crisis.

The unit case volume has fallen 7% in the Asia-Pacific region because of Covid-19. It also decreased in Latin America and Europe, the Middle East, and Africa. Sports drink's unit case volume has a 2% increase during the quarter, but it is the only segment that has seen an increase in volume in the Asia-Pacific region.

The unit case volume of soft drinks fell 2%. In the quarter, the segment of juices, dairy products, plant-based beverages fell 6%. Company officials said that Chinese sales began returning to a normal level due to the reopening of the country

PepsiCo Business Model -

In the case of PepsiCo, the Company has revenue of $13.88 billion in the first quarter of 2020. ย PepsiCo has a 7.7% ย increase in Net sales. Pepsi announced that they closed its $3.85 billion deal to buy Rockstar Energy and decided to offer distribution deals with other energy drink producers. Also, they signed a distribution contract with Vital Pharmaceuticals. ย 

Business model of PepsiCo
Total revenue of PepsiCo from 2016 to 2019

The North American beverage business experienced a 6% increase in organic revenue. But, CEO Ramon Laguarta said, that the change in customer purchasing habits will affect the amount of the company's profit in the first quarter. Also, the closure of movie theaters and stadiums, and restaurants will make an impact on Pepsi's business in the 2nd quarter.

Although consumers have reduced the use of carbonated soft drinks, PepsiCo is focused to diversify the products of the company. But, Coca-Cola's franchising business, made a decrease in its revenue base.

Colonel Harland David Sanders Story: Nobody Does Chicken Like KFC
The present-day fast food industry is the confluence of companies that sprung upduring the mid-90s and 2000s. Multinational companies like Pizza Hut and BurgerKing are popular around the globe, but KFC enjoys a following of its own.Colonel Sanders, the founder of KFC, will be remembered as one oโ€ฆ

Coca-Cola Vs PepsiCo: Pricing Strategy

Pricing Strategy of Coca-Cola -

Coca-Cola's pricing is based on the value that its products create for customers in different situations. The pricing strategy of Coca-Cola is what they refer to as "meet-the-competition pricing": Coca-Cola product prices are set around the same level as their competitors because Coca-Cola has to be perceived as different but still affordable.

Pricing Strategy of PepsiCo -

Pepsi is taking this value-based pricing strategy a bit further with its โ€œHybrid Everyday Valueโ€ model. This pricing strategy is an effort to make customers buy Pepsi not only when it is on sale. They have various sizes of bottles offered at various rates. This is priced according to the quantity of the drinks supplied. The promotion is also done keeping in mind the targeted customers.

Coca-Cola Vs PepsiCo: Marketing Strategies

Marketing Strategies of Coca-Cola -

Coca Cola introduced five strategic actions to achieve its goals which are as follows:

  • Market segmentation.
  • Brand establishment and Customer relationship.
  • Increasing financial efficiency.
  • Increasing process efficiency.
  • Focusing on core competencies and business models.

Marketing Strategies of PepsiCo -

A large part of Pepsi's marketing budget goes to digital marketing and advertising. Apart from that, a large sum is also spent on television advertising and other traditional methods of advertising. Any leading brand is investing heavily in digital technology for marketing and a better customer experience.

The Rapid Growth Of Foodtech Services In India
The application of technology to food innovation forms the core of the foodtech vertical. Nicolas Appertโ€™s improvement in 1810 of the canning procedure is anearly example of foodtech innovation. The emphasis was on safeguardingsustenance. The procedure wasnโ€™t called canning at that point, and Appโ€ฆ

Coca-Cola Vs PepsiCo: FAQs

What is the structure of Coca-Cola?

The organizational structure for Coca-Cola is designed in such a way so as to suit the changing needs of the customers. It uses a decentralized system of management, which is divided into two operating groups; the Bottling Corporate and Bottling Investment.

What is the production cost of Coca-Cola?

It should be around 15โ€“16 Rs, including the cost of sugar which is over 100 Mg in one liter of the bottle.

What is the pricing strategy of Coca-Cola in India?

The pricing strategy of Coca-Cola is what they refer to as "meet-the-competition pricing": Coca-Cola product prices are set around the same level as their competitors because Coca-Cola has to be perceived as different but still affordable.

What is the difference between Coca-Cola and Pepsi's marketing strategies?

A large part of Pepsi's marketing budget goes to digital marketing and advertising. Apart from that, a large sum is also spent on television advertising and other traditional methods of advertising. Any leading brand is investing heavily in digital technology for marketing and a better customer experience.

Coca-Cola works on building Customer relationships and making their production and distribution more efficient and cost-effective.

What is Coca-Cola's business strategy?

Coca-Cola is evolving its business strategy to become a total beverage company by giving people more of the drinks they want โ€“ including low and no-sugar options across a wide array of categories โ€“ in more packages sold in more locations.

Must have tools for startups - Recommended by StartupTalky

Subscribe to StartupTalky

Get the latest insights delivered to you right in your inbox

Great! Next, complete checkout for full access to StartupTalky.
Welcome back! You've successfully signed in.
You've successfully subscribed to StartupTalky.
Success! Your account is fully activated, you now have access to all content.
Success! Your billing info has been updated.
Your billing was not updated.