What Is the Power Make-Up of the Global Soft Drink Industry?

Two powerhouses control the market share of the carbonated soft drink (CSD) industry: Pepsi-Co. Inc. and The Coca-Cola Corporation. Since 2004, Coca-Cola Company was the market leader. ln 2015, Coca-Cola's carbonated soft drink market share amounted to 42.5%. The next market leader is Dr Pepper Snapple.

Key Takeaways:

  • Pepsi-Co. Inc. and The Coca-Cola Corporation are the two powerhouses controlling the carbonated soft drink (CSD) industry.
  • Since 2004, Coca-Cola Company has been the market leader, according to Statista.
  • In 2020, Pepsi-Co had a market cap of $188.6 billion while Coca-Cola had a market cap of $185.8 billion.

Understanding the Carbonated Soft Drinks (CSD) Industry

Carbonated soft drinks belong to the non-alcoholic beverage industry. This industry produces regular and diet fizzy drinks, juice, bottled water, sports and energy drinks, and hot and iced coffee and tea. The market leaders in this industry are The Coca-Cola Corporation, Pepsi-Co. Inc. and Dr Pepper Snapple.

The Coca-Cola Corporation and Pepsi-Co have been long-term competitors. Pepsi has been using the famous "Pepsi challenge" as a promotional slogan since 1975. The challenge was originally a taste experiment where consumers were invited to try beverages out of two blank cups—one filled with Pepsi Cola and one containing Coca-Cola. Consumers were asked to compare the two drinks and pick the one that they preferred. Pepsi Cola was the winner.

Market Share and Market Cap

As far as Wall Street is concerned, Pepsi-Co's shares have gained 19.45% for the last twelve months and 49.20% for the last five years, compared to 15.75% and 22.13% for Coca-Cola. Pepsi-Co had a market cap of $188.6 billion as of May 2020 while Coca-Cola had a market cap of $185.8 billion.

According to Beverage Digest, however, "Coca-Cola’s top CSD brands generally outperformed Pepsi-Co’s top brands in 2017."

It is difficult to reach consensus on which company controls more of the market without drilling down to a specific type of drink, for example, diet versus regular. Beverage Digest reports that Coca-Cola’s key diet sodas fared better than Pepsi-Co’s core diets.

Both companies face competition from the growing market of healthier alternatives to sugary soda drinks, such as energy and nutritional drinks. This has reduced Coca-Colas's operating margin from about 25% to approximately 20% since the year 2000. To adjust to these changing market conditions, both Coca-Cola and Pepsi-Co have developed their own alternative beverages but still face competition and market share erosion from other competitors.

Coca-Cola owns 500 brands, 21 of which generate approximately $1 billion each, per year, in revenue. Pepsi-Co, however, has a variety of leading brand-name food and beverage products with 22 of those brands generating more than $1 billion each, per year, in revenue, according to Sure Dividend.

Both companies span the globe, having a leading presence in over 200 countries. The companies and their respective primary brands are household names recognized worldwide, but are possibly most famous for the rivalry between them, which is typically known as the “cola wars.” Regarding longevity, targeted marketing campaigns, and different marketing tricks, this commercial war is considered one of the most epic in history.

The Future for the Cola Wars

Times have changed since the development of carbonated beverages. Consumers have begun to seek out healthier alternatives. Both cola brands have seen a recent decline amid increased competition, and analysts foresee a continued downward trend for the two main brands. However, these two companies are expected to continue to dominate the overall beverage market.