Coke Vs. Pepsi Essay

951 words - 4 pages

Carolyn Keene, a consumer analyst at the mutual fund firm Siegel, Parker, and Lauck (SPL), wanted to perform an EVA Analysis for Coca-Cola and PepsiCo for 2001 to 2003. She wanted to know which of the two companies would be the more attractive investment over the next few years. The following report from UBS Warburg: "Given PEP?s (PepsiCo?s) number 1 rank in the faster-growth segment and its improving competitive position in carbonated soft drinks, we believe PEP could, over the long term, threaten Coca-Cola?s lead in the domestic beverage category in all channels except fountain." made Carolyn wonder how this announcement would affect the two companies prospects for value creation as measured by EVA. Historically, Coca-Cola had trounced PepsiCo in terms of value created.With Pepsi?s acquisition of the Quaker Oats Company, PepsiCo would now have control of another non-carbonated beverage segment; 83.6 percent of the Sports Drink market with Gatorade. PepsiCo has control of the orange juice market with Tropicana; the bottled water market with Aquafina; the iced tea market with Lipton; and specialty drink market with Starbucks Frappucino and SoBe teas and fruit juices.Over the last five years, Pepsi had launched aggressive and exciting marketing campaigns that helped boost volumes and visibility. In response to Pepsi?s success with the new marketing campaigns, Coca-Cola veered away from its traditional ?feel good? ads. In the summer of 2000, they launched trendier ads which were highly unpopular and elicited negative reactions from customers and bottlers.Carolyn gathered information and data on both Coca-Cola and Pepsi. She then created EVA and ratio analyses. She acquired pro forma projections that were prepared by analysts at Credit Suisse First Boston for both Coca-Cola and Pepsi. In addition, she retrieved information on the current capital-market conditions. Market share of gallons of soft-drinks is also included in the analysis.From Carolyn?s analysis, I verified her calculations ROIC, Capital Cost, ROIC-WACC Spread, and EVA. Since financial statements were not available, I was not able to verify her ratio analysis. I also verified that percentages in the Market Share analysis. I found some numbers to be different from what was given in the book. For consistency sake in the numbers, I used my calculations in my analysis.To start my analysis of future EVA, I looked at the EVA tables. They are enclosed as Exhibits 1 and 2. I used the calculation of Weighted Average Cost of Capital (WACC) as the basis for my main analysis. From the EVA table, I used ROIC (Return On Invested Capital) as the Cost of Equity (ke). Weighted Average Cost of Capital (WACC) is given. I calculated Weight of Equity (e) by dividing ROA by ROE (Exhibits 3 and 4).Once I got my Weight of Equity (e), I subtracted e from one(1) to get Weight of Debt (d). I set the Corporate Tax Rate (T) at 40.0%....

Find Another Essay On Coke vs. Pepsi

Case Study on Coke versus Pepsi

1106 words - 4 pages The case study "Cola Wars Continue: Coke and Pepsi in the Twenty-First Century" focuses on describing Coke and Pepsi within the CSD industry by providing detailed statements about the companies’ accounts and strategies to increase their market share. Furthermore, the case also focuses on the Coke vs. Pepsi goods which target similar groups of costumers, and how these companies have had and still have great reputation and continue to take risks

Coke and Pepsi, The War Continue

594 words - 2 pages Coke and Pepsi, The War ContinueControl of market share is the key issue in this case study. The situation is both Coke and Pepsi are trying to gain market share in this beverage market, which is valued at over $30 billion a year (98). Just how is this done in such a competitive market is the underlying issue. The facts are that each company is coming up with new products and ideas in order to increase their market share. The creativity and

'The Cola Wars Continues: Coke and Pepsi in the 21st Century': Competitive Strategy Case Study

4581 words - 18 pages snack food complements (FritoLay).- Posses an innovative and creative team. The goals set are challenging yet achievable ("Beat Coke") and they have a clear mission.- Wide non-alcoholic beverage portfolio. Coca-Cola extended their product range with products such as Pepsi (Twist, One, Lime, Vanilla, Cherry…), Aquafina, Lipton Tea, Mountain Dew, Amp Energy, Mirinda, Starbucks Double Shot, Milk Chillers and more [2].Weaknesses:- Pepsi is

Cola Wars Continue: Coke versus Pepsi in the 21st Century. Industry Structure and Competitive Interaction

1123 words - 4 pages Industry Wrap.The soft drink industry is largely a duopoly. Coke and Pepsi were among the first to launch carbonated soft drinks (CDS). For over a century other companies tried to enter the market but had to face fierce competition and lawsuits from Coke and Pepsi. The worldwide demand for soft drinks in 1999 was 31 billion cases. Coke and Pepsi together held 74% of market share followed by Cadbury Schweppes at 6%. In this duopoly, participating

This is acomparison and contrast essay of the different advertising strategies that are used by Coke and Pepsi

1170 words - 5 pages The Cola WarThe cola war between Coca-Cola and Pepsi is still raging, and the soft drinkbattle ground has now turned toward cyberspace. This assumption wholes true asone begins to study the web sites of these soft drink giants. The Coke and Pepsiwebsites both advertise and entertain their consumer, appeals to a youngerand trendier

Coca-Cola vs PepsiCo

1044 words - 5 pages Coke and Pepsi have similar chemical composition and taste, people usually have strong preferences for one brand over another (Lubin). Works Cited Bellis, Mary. “The History of Coca Cola.”, 2014. Web. 8 May. 2014 Bellis, Mary. “The History of Pepsi Cola.”, 2014. Web. 8 May. 2014 Bhasin, Kim. “Coke Vs. Pepsi: The Story Behind the Neverending ‘Cola Wars’.” Business Insider. Business Insider Inc, 4 Jan

Maketing strategy "PEPSI IN CHINA"

1303 words - 5 pages increased its sales volume as well.Table One: Pepsi vs. Coca Cola (Market shares in Guangzhou)Year 1997 1998 1999The Three Brands of Pepsi 10.90% 15.50% 28.50%The Four Brands of Coca Cola 48.80% 51.50% 45.80%l The three brands of Pepsi in the Guanzhou market are Pepsi, 7 up and Minute Maidl The four brands of Coca Cola in the Guanzhou market are Coke, Joy Cola ASprite, and Fanta.Table Two: A Comparison of the Market Shares of Pepsi and Coke in

The Coca-Cola Company - Overview

1030 words - 4 pages as a whole will be satisfied through later session long project assignments.References UsedLa Monica, Paul R. 2002. Coke vs. Pepsi: the new cola wars. Forget about how Vanilla Coke and Pepsi Blue taste. Which stock is better: Coca-Cola or PepsiCo? CNNMoney. Retrieved from the World Wide Web on 01 April 2004:, Alice. 2004. Pepsi's Cutting Edge? The Motley Fool. Retrieved from the World Wide

coca cola wars and stuff about it - business - paper

460 words - 2 pages , the brand has maintained its popularity over competitors such as PepsiCo. The cola war between the two brands has lasted for decades, with the advantage shifting between the competitors. But by looking at the statistics, Coca-Cola has won the cola war. Coke controls 42% of the total carbonated soft drink market, compared with Pepsi's 30% (“Coke Vs. Pepsi: By The Numbers,” 2014). Coca-Cola has been selling large portions of their bottling

you are an investor

2961 words - 12 pages on December 14, 2013, from: Company. (2013). Retrieved on December 13, 2013, from: http://www.coca-colacompany.comD'Altorio, Tony. (1999-2013). Coke vs. Pepsi. Are the Cola Wars Over. Investment U. RetrievedDecember 14, 2013 from: Bottling Company. (2013). Our Product Portfolio. Coca-Cola. Retrieved on

5 forces

854 words - 3 pages of new entrantsIndustry profitability (the more profitable the industry the more attractive it will be to new competitors)Threat of substitute products or services[edit]The existence of products outside of the realm of the common product boundaries increases the propensity of customers to switch to alternatives. For example, tap water might be considered a substitute for Coke, whereas Pepsi is a competitor's similar product. Increased marketing

Similar Essays

Coke Vs. Pepsi Essay

2149 words - 9 pages Coke vs. Pepsi The company known as Coca-Cola today was started in September of 1919, but the first Coke brand was served as early as 1886. Since that time it has grown to be one of the most globally recognized brand names with a stock value of $167 billion. Coke’s plan has always been developed with the future in mind. Right away the company realized that it was more profitable to manufacture the concentrate used to make carbonated

Pepsi Vs. Coke Essay

618 words - 2 pages Compare and Contrast I have decided to compare and contrast the Coke a Cola and Pepsi Cola websites. I found that these two companies have been fighting to bring customers to their side since the birth of the two companies. If you ask anyone who drinks soda, they have a favorite, wether it being Coke or Pepsi. A major factor in getting a customer to buy your product is marketing. If a company appears to the public as an inviting company, people

Competitive Study Between Leading Brands: Pepsi Vs Coke

4800 words - 19 pages Pepsi) and Paula Abdul (for Diet Coke). One example of a heated exchange that occurred during the Cola Wars was Coca-Cola making a strategic retreat on July 11, 1985, by announcing its plans to bring back Coke Classic. Royal Crown Cola was also a major competitor with Coke and Pepsi during the "Cola Wars."The Cola Wars are referenced in the Billy Joel song "We Didn't Start the Fire"; in the South Park episode "It's Christmas in Canada"; and recently

Cola Wars Continue: Coke Vs. Pepsi In The 1990s (Cola Wars)

1934 words - 8 pages Pepsi and Coke, no sense of competition can be felt in bottling industry. Reasons are that, first, Pepsi and Coke control the majority of bottlers in 1990s; second, intrabrand competition is restricted by the franchise agreement, which is protected by 'Soft Drink Interbrand Competition Act'.From the view of capital requirement, it is easier for others to enter the CP industry than to enter the bottling industry, since comparing to $30-$50 million