The Great Cola War escalated into a global conflict this week as PepsiCo Inc., slyly tooting its arch-rival's horn, introduced New Coke overseas.
The company invited reporters from Singapore to Paris to taste-test the new beverage as proof of Pepsi's superiority. Meanwhile, PepsiCo was busy at home combating Coca-Cola's newest propaganda offensive -- the suggestion that Pepsi may be testing a reformulated version of its flagship flavor called "New Pepsi."
A Pepsi spokesman said yesterday that there is "absolutely no truth" to such rumors, but the exchange reflected the spirited and increasingly mischievous nature of one of America's hottest consumer rivalries.
Marketing analysts say Pepsi, full of fizz and vinegar, seems to enjoy the battle more.
When Coke swallowed its pride, for instance, and brought back its original flavor as Coca-Cola Classic on July 10, Pepsi let the world know it was giving its employes a holiday.
And Roger Enrico, president of Pepsi-Cola USA, offered the media the quote of the day: "How do you advertise it -- Coke Are It?"
"Pepsi has been very successful in establishing an image for itself as a go-go company," said Emanuel Goldman, a soft-drink industry analyst with Montgomery Securities. "Its advertising response has been really innovative. . . . Pepsi's image is that of a very dynamic company."
"Cola wars are a fun thing," said Ken Ross, a Pepsi-Cola USA spokesman.
The 87-year-old competition between the two titans that dominate worldwide soft-drink sales -- estimated to be a $50 billion market -- took a new turn on April 23 when Coca-Cola announced it had changed the 99-year-old taste of Coke.
The less-carbonated, sweeter taste was immediately likened by many analysts to that of Pepsi, which had beaten Coke for years in blind taste tests, even though Coke outsells Pepsi. That day marked "the irrevocable turning point of the Cola Wars in Pepsi's favor," said Pepsi-Cola International President Robert Beeby this week in a videotaped message beamed to news conferences in 16 foreign cities.
Beeby reminded the overseas reporters that Coca-Cola had described the reformulation as "the surest move ever made.
"We heartily welcome the opportunity around the world to match the single preferred taste of Pepsi-Cola -- the taste too good to change -- against the split personality of Coca-Cola, or whichever single product they choose to market," Beeby said as Pepsi's guests sipped New Coke. "In light of the competition's recent activity, Pepsi-Cola has clearly become the gold standard by which all colas will forever be measured."
Coca-Cola, however, outsells Pepsi overseas by about 3.5 to 1, Goldman said. At home, Coke has a 24.5 percent share of the $23 billion-a-year U.S. soft-drink market, compared with Pepsi's 18.5 percent. Coca-Cola Co.'s soft-drink products, which include Tab, Sprite, Diet Coke and Fanta flavors, together hold a 39.4 percent share of the domestic market; PepsiCo's soft drinks, including Diet Pepsi, Pepsi-Lite, Slice and Mountain Dew, together hold 26.9 percent.
Pepsi "is very good at playing the game. But after 87 years of playing follow the leader, you ought to be pretty good," Coca-Cola Assistant Vice President Charlton Curtis said.
Coca-Cola is not above having fun, too. Coca-Cola "just thought it was a little interesting" when it found a soft drink in Japan labeled "New Pepsi," Curtis said. Coca-Cola supplied a photo of the Japanese beverage can to American news agencies and said it contradicted Pepsi's claim that its flavor is "too good to change."
PepsiCo said "New Pepsi" is a lemon-flavored cola introduced in 1982 in one area of Japan. "New Pepsi" is still sold there, but PepsiCo has no plans to sell it elsewhere, or to reformulate Pepsi's flavor, Ross said. "There are absolutely no plans to bring out a New Pepsi in the U.S.," he said.
PepsiCo has no reason to change the taste of Pepsi because Pepsi has shown it can beat Coca-Cola Classic's flavor and is already similar to New Coke, Goldman said.
Pepsi has come a long way since 1939, when it took a subtle swipe at Coca-Cola with the first 15-second radio jingle. A 6 1/2-oz. bottle of Coke then sold for 5 cents, so Pepsi advertised:
"Pepsi-Cola hits the spot; Twelve full ounces, that's a lot; Twice as much for a nickel, too; Pepsi-Cola is the drink for you."
In 1950, Coke outsold Pepsi by 5 to 1. Brand Coke's lead was cut in half by 1960 and is now estimated to be about 1.15 to 1.
But while advertising jingles and campaigns are memorable, analysts attribute Pepsi's growth to the development of a superb marketing and distribution network. The soft-drink industry is intensely consumer-driven, and all soft-drink companies have raced to develop new products, new packaging options and new distribution networks.
PepsiCo and Coca-Cola are now the two superpowers, having both increased their market shares at the expense of Royal Crown, 7-Up, Dr Pepper and others.
Although Pepsi's consistent victories in the "Pepsi Challenge" taste tests were "always a thorn in the side" to Coca-Cola, brand Pepsi has not gained on brand Coke in more than a decade. In 1973, Pepsi's and Coke's shares of the domestic market were less than 2 percentage points different than they are today, Goldman said.
Yet both soft-drink companies have increased their market shares through introducing new beverages.
Pepsi's big victory was breaking away from the pack to become Coke's major competitor, a status it is enjoying.
"Pepsi was always the underdog, so it had to be aggressive and persistent," said Samuel Craig, a professor of marketing at New York University's Graduate School of Business Administration. "Pepsi's is the classic catch-up strategy."