A:

Approximately 60% of the global nonalcoholic beverages industry is controlled by Coca-Cola and Pepsi. Of this 60%, the split between Coca-Cola and Pepsi, respectively, is about 40% to 20%. This average is on a global and U.S. domestic basis. Both companies face competition from the growing market of healthier alternatives to sugary soda drinks, such as energy and nutritional drinks. This has reduced Coke'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 have developed their own alternative beverages but still face competition and market share erosion from other competitors.

The Coca-Cola Co. (KO) and PepsiCo (PEP) are the two dominating forces in the nonalcoholic beverages industry and have been for decades. The largest nonalcoholic beverage company in the world is Coca-Cola, which owns 500 brands, 17 of which generate approximately $1 billion each, per year, in revenue. Pepsi, 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.

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.” In terms of longevity, targeted marketing campaigns and different marketing tricks, this commercial war is considered one of the most epic in history.

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

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