They were Pepsi’s 5 years of fame
Warren Buffet. It’s the name that markets would swear by to the death. And a name that Coca Cola loves to have on its list of investors. That should end the debate, right? But 2000 was the year when Coca Cola faced a not-so-Warren-Buffet moment. It was the time when both Pepsi and Coca Cola were struggling hard for a prized catch – US-based Quaker Foods, owner of Gatorade, the world’s most popular energy drink brand. The then Chairman and CEO Douglas Daft was not being ‘daft’ when he suggested that Coca Cola must do whatever possible to acquire Quaker, but Warren Buffet vetoed Daft’s proposal. Result: Quaker went to Pepsi. Then began a most dramatic turnaround unprecedented in the history of the long drawn Pepsi-Coke war. In year 2000, Pepsi was languishing with its Mcap at 1/3rd of Coca-Cola’s.
The situation changed in late 2005 to the extent that Pepsi overtook Coke in terms of market cap for the first time ever. The key to this turnaround lay in Pepsi’s more successful diversification strategy, of which Quaker was an important part. Pepsi stole the march from Coca Cola in terms of moving away from soft drinks into other territories. This was apt as the Carbonated Soft Drinks (CSD) sector is declining, primarily due to health concerns. In 2008, CSD case volume declined by around 3% yoy (Beverage Digest) to touch 9.6 billion 192-oz cases.
Warren Buffet. It’s the name that markets would swear by to the death. And a name that Coca Cola loves to have on its list of investors. That should end the debate, right? But 2000 was the year when Coca Cola faced a not-so-Warren-Buffet moment. It was the time when both Pepsi and Coca Cola were struggling hard for a prized catch – US-based Quaker Foods, owner of Gatorade, the world’s most popular energy drink brand. The then Chairman and CEO Douglas Daft was not being ‘daft’ when he suggested that Coca Cola must do whatever possible to acquire Quaker, but Warren Buffet vetoed Daft’s proposal. Result: Quaker went to Pepsi. Then began a most dramatic turnaround unprecedented in the history of the long drawn Pepsi-Coke war. In year 2000, Pepsi was languishing with its Mcap at 1/3rd of Coca-Cola’s.
The situation changed in late 2005 to the extent that Pepsi overtook Coke in terms of market cap for the first time ever. The key to this turnaround lay in Pepsi’s more successful diversification strategy, of which Quaker was an important part. Pepsi stole the march from Coca Cola in terms of moving away from soft drinks into other territories. This was apt as the Carbonated Soft Drinks (CSD) sector is declining, primarily due to health concerns. In 2008, CSD case volume declined by around 3% yoy (Beverage Digest) to touch 9.6 billion 192-oz cases.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
and Arindam Chaudhuri (Renowned Management Guru and Economist).
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