PEPSI COLA AND FRITO LAY

THE PEPSI-COLA STORY

PepsiCo Inc is a Fortune 500, American Multinational Corporation

headquartered in Purchase, NY and a world leader in convenient

snacks, foods and carbonated and non-carbonated beverages with

revenues of more than $43 billion and over 198,000 employees.

Besides the Pepsi-Cola brands, the company owns the brands

Quaker Oats, Gatorade, Frito-Lay, SoBe, Naked, Tropicana,

Copella, Mountain Dew, Mirinda and 7-Up. 7-Up is especially for

outside USA markets.

It only became known as PepsiCo when it merged with Frito Lay in 1965. Until 1997, it

also owned KFC, Pizza Hut, and Taco Bell, but these fast-food restaurants were spun off

into Tricon Global Restaurants, now Yum! Brands, Inc. PepsiCo purchased Tropicana in

1998 and Quaker Oats in 2001. Today, The PepsiCo Family has three major divisions of

the PepsiCo family: PepsiCo Americas Beverages, PepsiCo Americas Foods, and PepsiCo

International.

Indra Krishnamurthy Nooyi has been the chief executive of PepsiCo since 2006 with her

"Performance with Purpose" philosophy that led it to the real corporate excellence.

THE SUMMER OF 1898,

As usual, was hot and humid New Bern, North Carolina. So a young pharmacist named

Caleb Bradham began experimenting with combinations of spices, Juices, and syrups,

trying to create a refreshing new drink to serve to his customers. He seceded beyond

expectations, inventing the beverage now known around the world as… PEPSI-COLA.

PEPSI'S BEGININGS

Caleb Bradham knew that to keep people returning to his pharmacy, he would have to

turn it into a gathering place. Like many pharmacists at the turn of the century, he had a

soda fountain in his drugstore, where he served his customers refreshing drinks that he

created himself. His most popular creation was a unique mixture of carbonated water,

kola nuts, vanilla and rare oils, named "Brad's Drink" by his customers.

Caleb decided to rename it "Pepsi-Cola," and advertised his new soft drink to enthusiastic

customers. Sales of Pepsi-Cola started to grow, convincing him to form a company and

market the new beverage. In 1902, he launched the Pepsi-Cola Company in the back

room of his pharmacy, and applied to the U.S. Patent Office for a trademark. An official

patent was awarded on June 16, 1903. At first, he mixed the syrup himself and sold it

exclusively through soda fountains. But soon Caleb recognized that a greater opportunity

existed—to bottle Pepsi-Cola so that people everywhere could enjoy it.

BUILDING THE BUSINESS

Advertising Pepsi-Cola as "Exhilarating, Invigorating, Aids Digestion," the business began

to grow. Caleb sold 7,968 gallons of syrup in 1903. Two years later, he awarded two

franchises to bottle Pepsi-Cola to independent investors in Charlotte and Durham, North

Carolina. In 1906, the number of franchises grew to 15, and leapt to 40 by 1907. By the

end of 1910, there were Pepsi-Cola franchises in 24 states, and the company was selling

more than 100,000 gallons of syrup per year.

Building a strong franchise system was one of Caleb's greatest

achievements. Local Pepsi-Cola bottlers, entrepreneurial in spirit

and dedicated to the product's success, provided a sturdy

foundation for a growing company. They were then, and continue

to be today, the cornerstone of the Pepsi-Cola enterprise.

Caleb's business expertise and advertising savvy captured

widespread attention for his company. He erected a Pepsi-Cola

headquarters so spectacular that the town of New Bern featured it

on a postcard. The company was one of the first in the United

States to switch from horse-drawn transport to motor vehicles,

and a 1913 editorial in the Greensboro Patriot praised Caleb for his

"keen and energetic business sense." He was even mentioned as a

possible candidate for governor.

Pepsi-Cola's advertisements changed, too. Famous racing car

driver Barney Oldfield endorsed Pepsi in newspaper ads as "a bully

drink ... refreshing, invigorating, a fine bracer before a race."

Caleb promoted Pepsi sales with the slogan, "Drink Pepsi-Cola. It

Will Satisfy You."

The outbreak of World War I changed the U.S. financial landscape,

and the cost of doing business increased drastically.

Sugar prices fluctuated wildly between record highs and disastrous

lows, and so did the cost of producing Pepsi-Cola. In 1923, Pepsi-

Cola was bankrupt. Caleb returned to his pharmacy and sold the valuable Pepsi-Cola

trademark to Craven Holdings Corporation, the first of what would be several owners.

PEPSI-COLA HITS THE SPOT

The nation sank deeper and deeper into the Great Depression. Times were tough and five

cents was a lot to pay for a six-ounce soft drink. So, Guth decided to make Pepsi-Cola a

great value for hard-pressed consumers. In Baltimore, he offered twice as much Pepsi for

the same price as other soft drinks—a 12-ounce bottle of cola for just a nickel—and it was

a big hit. Consumers responded immediately, business boomed and Guth expanded the

idea throughout the Pepsi-Cola system.

During the 1930s, international expansion began. The

Pepsi-Cola trademark was registered in Latin America

and the Soviet Union, and franchises were awarded to

bottlers in Canada. In 1934, the company moved to a

new headquarters in Long Island City, New York, and

four years later Walter S. Mack was selected to be the

new president of Pepsi-Cola. Mack believed that

advertising could be a cornerstone of soft drink

marketing and introduced a comic strip, "Pepsi & Pete,"

to promote Pepsi's pricing advantage with the line

"Twice as Much for a Nickel." Other cola companies had

no choice but to lower their prices to compete. But

Pepsi retained its leadership with a catchy song about

its low price, with "twice as much for a nickel" as its lyrics. The tune, "Nickel, Nickel," was

the first advertising jingle to be played and heard coast-to-coast on network radio,

making broadcast and advertising history. In time, it became so popular that it was

recorded in 55 languages. More than one million copies were released to jukeboxes, and

the tune, renamed "Pepsi-Cola Hits the Spot," was even played in Carnegie Hall. In 1940,

LIFE magazine declared the jingle "immortal." In 2005, Advertising Age named it one of

the top ten of the past century, commenting, "This (spot) came at a time when no one

was using jingles." Eventually, Pepsi-Cola grew larger than the candy company that

owned it, and it was decided to change the name of Loft Incorporated to the Pepsi-Cola

Company.

World War II resurrected an old nemesis, sugar rationing, and the action that had

contributed to the company's downfall during World War I. But Mack, learning from past

mistakes, bought a sugar plantation in Cuba, and Pepsi continued to prosper. It was an

era of men and women in uniform serving their country overseas, answering great

challenges in distant lands. In keeping with the patriotic feelings of the era, Pepsi-Cola

adopted a new red, white and blue color scheme for its bottles, and opened a USO

Canteen in New York City's Times Square, where more than a million families recorded

messages to send to their young men and women serving all over the world.

PEPSI EXPANDS AROUND THE WORLD

After the war ended in 1945, Pepsi-Cola turned its attention to ideas that would capture

the spirit of a victorious America. The company moved its world headquarters to

Manhattan, and continued to expand overseas into Latin America, the Philippines and the

Middle East. At home, the company began experimenting with new bottle sizes, and for

the first time began to package Pepsi-Cola in cans.

But the post-war marketplace was changing rapidly. A new retail phenomenon called

supermarkets was beginning to appear, and in combination with equally dramatic changes

in the economics of producing soft drinks, Pepsi was forced to abandon its strategy of

selling the soft drink for half the price of its chief competitor. Soon, the long-running

"Nickel, Nickel" advertising was replaced with a claim more in keeping with energetic post

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war America, "More Bounce to the Ounce." Throughout this period, Pepsi's company

president Al Steele's constant traveling companion was his wife, known to America's film

fans as the glamorous movie star, Joan Crawford.

Many believe that it was stylish and sophisticated Miss Crawford who moved the company

away from its "value" theme of the '40s into the more sophisticated campaigns of the

'50s. A new logo incorporating the "bottle cap" was adopted, and Pepsi was no longer

advertised based on price, but as a lifestyle accompaniment. After Mr. Steele's death in

1959, Miss Crawford was elected a member of the board of directors.

During that era, Americans had become more weight conscious, and

Pepsi advertising reflected this cultural shift. Campaigns touted Pepsi's

low caloric content with slogans, "The Light Refreshment" and

"Refreshing without Filling. Innovation continued, and a distinctive new

"swirl" bottle was introduced in 1958. That same year, a new

advertising campaign, "Be Sociable, Have a Pepsi," was also launched.

Internationally, Pepsi continued to expand, and was now available in

120 countries.

At the 1959 American Exposition in Moscow, Pepsi-Cola International

president Donald M. Kendall arranged for Vice President Richard M. Nixon and Soviet

Premier Khrushchev to visit the Pepsi-Cola kiosk. The press snapped pictures of the two

world leaders sipping Pepsi, inspiring "Sociable" themed headlines in newspapers around

the world. "Sociable's" was the first Pepsi-Cola campaign to focus on young people as the

brand's major consumer target, and was soon followed by another youth-oriented

campaign that was to become Pepsi's persona, "Now It's Pepsi, for Those Who Think

Young."

THE PEPSI GENERATION

The stage was set for another advertising breakthrough. In the late 1950s, a demographic

phenomenon called the post-war "baby boom" would change forever the way Americans

would think, act and live. They were a new generation, embracing a new lifestyle and

heading into the future with a conviction that what lay ahead was

better than what lay behind.

Pepsi-Cola sensed that attitude and captured their spirit with a name

that has transcended time and continues to identify with Americans

today. They were the first "Pepsi Generation." This vanguard of active,

fun-loving, contemporary America would claim Pepsi as its own, under

the banner "Come Alive! You're in the Pepsi Generation." That daring

campaign, launched in the early '60s, set a new standard for

advertising. It captured, like no other, a portrait of America living life

to the fullest.

Ever since then, the spirit of that first Pepsi

Generation campaign has been an integral

part of America's best-loved and most

recognized advertising— "Join the Pepsi

People, Feelin' Free"..."You've Got a Lot to

Live. Pepsi's Got a Lot to Give"... "Have a

Pepsi Day!"... "Catch that Pepsi

Spirit!"..."Pepsi Now!"... "The Joy of

Pepsi"—campaigns that hold a mirror to the

face of America and reflect the best of it.

This is really what the Pepsi Generation set out to do in the first place. During its first 65

years, Pepsi-Cola Company sold only one product—Pepsi. But with the baby boom, not

only did the nation's population change, so did their dietary habits. So, in 1964, the

company developed a new low-calorie drink with a taste worthy of carrying the Pepsi-Cola

name: Diet Pepsi.

Initially advertised alongside Pepsi, Diet Pepsi later took on an identity of its own. One of

its earliest campaigns, "Girlwatchers," was built around a catchy jingle that became so

popular it was released as a commercial record and hit the Top 40 list.

In 1964, Mountain Dew, a regional soft drink favorite, became an

important new addition to the growing family of Pepsi-Cola brands, and its

advertising theme, "Ya-Hoo, Mountain Dew!" became the brand's instantly

recognizable signature. Serving Pepsi in cans had, by now, proved so

popular that full-scale commercial distribution began in 1965. That same

year, the Pepsi-Cola Company merged with a successful Dallas, Texas,

marketer of salty snacks, Frito-Lay, Inc., to form PepsiCo, Inc.—one of the

great consumer products companies on the U.S. business scene. Donald M.

Kendall was founder, and soon after the merger, the company opened its

first soft drink operations in Eastern Europe and Japan.

THE PEPSI CHALLENGE

A remarkable business phenomenon occurred as the 1960s gave way to the '70s. Business

people, the media and consumers began to observe that Pepsi, an upstart, aggressive

company, was challenging the dominant soft drink company, Coca-Cola, with increasing

success. The media named the competition "the cola wars," and as events were to prove,

it was to have far-reaching effects on the soft drink industry.

Throughout the fast-paced '70s, Pepsi continued to evolve. Larger serving-size bottles

were introduced, like 32-ounce and 64-ounce packages. Soon after, family-size bottles

became easier to use, thanks to lightweight, recyclable plastic bottles that, with

improvements in technology, eventually became lighter and stronger than glass. In 1970,

the company moved its headquarters from New York City to Purchase, New York. As

consumers changed, so did Pepsi, and the Pepsi Generation stayed in perfect harmony

with the temper of the times. Diet Pepsi continued its remarkable growth, and Mountain

Dew advertising appeared on national television for the first time. Overseas, some 15

years after U.S. Vice President Nixon and Soviet Premier Khrushchev visited the Pepsi-

Cola kiosk at the American Exposition, Pepsi became the first American consumer product

to be manufactured in the Soviet Union. Midway through the decade, The Pepsi Challenge,

a landmark international marketing strategy, was born when consumer test after

consumer test confirmed that more people preferred the taste of Pepsi over Coke.

The Pepsi Challenge campaign simply made that reality into advertising, with filmed taste

tests between Pepsi and Coke. The campaign made marketing history, and helped Pepsi

gain market share as well. By 1976, in an unprecedented development, Pepsi-Cola

became the single largest-selling soft drink brand in American supermarkets. By the time

the 1980s dawned, Pepsi was clearly the number one brand in take-home (grocery and

convenience store) sales. The diet market continued its growth, and Diet Pepsi grew with

it. Mountain Dew was also continuing to soar with help from a new advertising campaign,

"Give Me a Dew."

It's 1984. Almost no one noticed that the Pepsi Generation

celebrated its twentieth anniversary. But there was more

advertising history to be made centered on this theme this

time with pop music in a starring role. "Pepsi. The Choice of

a New Generation" was launched in 1984 and once again put

Pepsi on the leading edge of contemporary culture. In its

early stages, the New Generation campaign featured the

biggest entertainer of the time, Michael Jackson. He and his

famous "Billie Jean" starred in a series of Pepsi cola

commercial, merging the worlds of business and

entertainment in a way that no one had ever seen before.

The string of promotion successes, from the Pepsi

Generation up through The Pepsi Challenge and on into the

New Generation advertising, was having an effect in places

other than Pepsi headquarters. The company's biggest rival, Coca-Cola, stung by the

growth and prominence of Pepsi, abandoned its century-old Coke recipe in favor of

a new product formulated to taste more like Pepsi. However, consumers quickly

rejected the new Coke, and in short order, Coca-Cola was forced to reinstate the

original product under a new name, Coca-Cola Classic. Pepsi President Roger Enrico

declared victory in the cola wars, and awarded Pepsi employees with an unexpected

holiday to celebrate.

Throughout the '80s, a long list of stars and superstars lent their magic to Pepsi, including

pop music icons Lionel Richie, Tina Turner, David Bowie, Glen Frey and Gloria Estefan and

sports greats Joe Montana and Dan Marino. Geraldine Ferraro, the first woman vicepresidential

candidate in the U.S., starred in a Diet Pepsi spot. The irrepressible Michael J.

Fox brought a special talent, style and spirit to a series of Pepsi and Diet Pepsi

commercials. Michael Jackson returned to star in the first-ever episodic commercial, and

Pepsi made its first trip on the Space Shuttle, carried in a specially designed "space can."

As Pepsi extended its consumer reach through advertising, international expansion

continued. Pepsi crossed yet another new frontier by beginning distribution in China.

 

SOME ADVERTISING SLOGANS OF PEPSICO

* 1939–1950: "Twice as Much for a Nickel"

* 1950: "More Bounce to the Ounce"

* 1950–1957: "Any Weather is Pepsi Weather"

* 1957–1958: "Say Pepsi, Please"

* 1958–1961: "Be Sociable, Have a Pepsi"

* 1961-1963: "Now It's Pepsi for Those Who Think Young"

* 1963–1967: "Come Alive, You're in the Pepsi Generation"

* 1967–1969: "(Taste that beats the others cold) Pepsi Pours It

On".

* 1969–1975: "You've Got a Lot to Live, and Pepsi's Got a Lot to

Give"

* 1975–1977: "Have a Pepsi Day"

* 1977–1980: "Join the Pepsi People (Feeling Free)"

* 1980–1981: "Catch That Pepsi Spirit" [David Lucas, composer]

* 1981–1983: "Pepsi's got your taste for life"

* 1983: "It's cheaper than Coke!"

* 1983–1984: "Pepsi Now! Take the Challenge!"

* 1984–1991: "Pepsi. The Choice of a New Generation"

* 1986–1987: "We've Got The Taste" (commercial with Tina Turner)

* 1987–1990: "Pepsi's Cool"

* 1990–1991: "You got the right one Baby UH HUH"

* 1990–1991: "Yehi hai right choice Baby UH HUH"

* 1991–1992: "Gotta Have It"/"Chill Out"

* 1992–1993: "Be Young, Have Fun, Drink Pepsi"

* 1993–1994: "Right Now" Van Halen song for the Crystal Pepsi advertisement.

* 1994–1995: "Double Dutch Bus" (Pepsi song sung by Brad Bentz)

* 1995: "Nothing Else is a Pepsi"

* 1995–1996: "Drink Pepsi. Get Stuff." Pepsi Stuff campaign

* 1996–1997: "Pepsi:There's nothing official about it"

* 1997–1998: "Generation Next" - with the Spice Girls.

* 1998–1999: "It's the cola" (100th anniversary commercial)

* 1999–2000: "For Those Who Think Young"/"The Joy of Pepsi-Cola"

* 1999-2006: "Yeh dil maange more" (Hindi - meaning "This heart asks for more")

(India)

* 2003: "It's the Cola"/"Dare for More" (Pepsi Commercial)

* 2005–2006: "An ice cold Pepsi. It's better than sex!" (Larry Sypolt)

* 2006–2007: "Why You Doggin' Me"/"Taste the one that's forever young"

* 2007–2008: "More Happy"/"Taste the once that's forever young" (Michael Alexander)

* 2008: "Pepsi Stuff" Super Bowl Commercial (Justin Timberlake)

* 2008: "Рepsi is #1" Тv commercial (Luke Rosin)

* 2008–present: "Something for Everyone."

* 2009–present: "Refresh Everything"/"Every Generation Refreshes The World"

* 2009-present: "Yeh hai youngistaan meri jaan" (Hindi - meaning "This is our young

country my baby")

* 2009-present: "My Pepsi My Way"(India)

BROADENING APPEAL

As the 1990s began, so did a new era in Pepsi-Cola operations worldwide. The company

signed the largest trade agreement in history with the Soviet Union. Seeking long-term

growth, Pepsi invested in such high-potential markets as Southeast Asia, Eastern Europe,

Mexico and Argentina.

Back in the United States, the '90s ushered in a new generation of award-winning

advertising. The music legend Ray Charles joined the Pepsi family when—backed up by

the "Uh-Huh Girls"—he crooned, "You Got the Right One Baby, Uh-Huh!" for Diet Pepsi.

Supermodel Cindy Crawford helped introduce a new package design, and Pepsi, with the

help of basketball's superstar, Shaquille O'Neal, reminded America to "Be Young, Have

Fun, and Drink Pepsi."

Mountain Dew, including Diet Mountain Dew—by now the sixthlargest

soft drink trademark in the U.S.—carried its appeal to

Generation X on the shoulders of a group of Dew Crew. Pepsi and

Mountain Dew helped these brands to expand their appeal, and Slice,

a unique line of flavors, was added to the Pepsi soft drink portfolio.

Consumers continued to broaden their tastes in refreshment

beverages, and Pepsi broadened its product line and became a new

kind of company—a total beverage company. Now, in addition to

being one of the leading soft-drink marketers in the world, Pepsi-

Cola's products include water, tea, coffee drinks, juices, juice drinks

and soft drinks.

Through a partnership established with the Thomas J. Lipton

Company in 1991, Pepsi became the market leader in ready-to-drink

teas, with Lipton Brisk the number one brand in the marketplace.

Another partnership, with premier coffee retailer Starbucks, produced

Frappuccino, new, coffee-based, ice-cold refreshment that rapidly

became the nation's most popular ready-to-drink cold coffee. Pepsi

also made history when it introduced Aquafina purified bottled water.

Pepsi pioneered the concept of freshness dating, providing consumers with an easy-toread

product freshness code. The consumer-friendly "best if used by" date stamp initially

appeared on Diet Pepsi packaging and quickly became standard throughout the entire

range of Pepsi product offerings. Freshness dating has since become an industry-wide

practice. "GeneratioNext" was introduced in 1997, signaling a return to the long-running

Pepsi Generation theme, and updating it for a new era of Pepsi consumers. In 1998, when

Pepsi celebrated its centennial year, the Pepsi cans sported a fresh new look for the new

millennium. The new look, called "Globe," prominently features a stylized, threedimensional

Pepsi Globe set against a blue ice backdrop.

 

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THE NEW MILLANIUM

Entering the new millennium, Pepsi's world-class research and development team came up

with a series of popular new products. Mountain Dew was joined by new flavors: Mountain

Dew Code Red (a cherry-flavored Mountain Dew) and Mountain Dew LiveWire (an orangeflavored

Mountain Dew). Sierra Mist gave Pepsi its first national lemon-lime brand. Pepsi's

flagship brand now had company with one-calorie Pepsi ONE; Pepsi Twist, featuring a

twist of lemon; Pepsi Vanilla; and Pepsi Edge, a cola with half the calories and sugar of

regular colas.

Consumer demand for non-carbonated drinks skyrocketed and Pepsi delivered. By

acquiring the popular SoBe line of healthy refreshment beverages and by bringing aboard

new offerings such as Dole and Tropicana juices, Pepsi provided

consumers refreshment for every taste and for every time of day. On

the airwaves, over the Internet and around the water cooler, Pepsi's

first-class advertising and marketing turned heads and dominated

conversations.

First, there was pint-sized actress Hallie Eisenberg, who won America's

heart as "The Pepsi Girl," introducing Pepsi's new "Joy of Cola"

campaign supported by the voices of Marlon Brando, Isaac Hayes and

Aretha Franklin. Later spots would feature "The Pepsi Girl" rocking with

Faith Hill and KISS. "The Joy of Pepsi" featured some of the most

popular music & sports icons singing Pepsi's praises— including Britney Spears, Shakira

and Beyoncé Knowles. Oscar winner Halle Berry added her star power to promote her

favorite lemon-flavored cola, Pepsi Twist.

PEPSI ENTERS THE DIGITAL AGE

Mountain Dew took full advantage of the Dew Dudes' love of the extreme. From headbutting

a mountain ram to tackling a cheetah, there was nothing this crew wouldn't do to

get their Dew. Alliances with other well-known companies kept Pepsi and its brands fresh

in consumers' minds and at the forefront of popular culture. A marketing relationship with

Yahoo!® led to a successful PepsiStuff.com promotion during which people could redeem

Pepsi points online for prizes. Pepsi's TV debut was its own music show, "Pepsi Smash," on

WBB and a weekly series, "Pepsi Musica" launched by Pepsi on the Telefutura network.

Pepsi also partnered with Apple Computer, Inc. and its red-hot iTunes site and iPod

portable music player to create a sweepstakes giving away free downloads and other

prizes. On the field, Pepsi partnered with the best—Major League Baseball, Major League

Soccer.

Today, the company continues to innovate, creating new products, new flavors and new

packages in varying shapes and sizes to meet the growing demand for convenience and

healthier choices. Pepsi is constantly on the lookout for ways to ensure that our

consumers can get the products they want, when they want them and where they want

them.

PEPSICO

From its humble beginnings over a century ago, Pepsi-Cola has grown to

become one of the best-known, most-loved products throughout the

world. And the company behind it—PepsiCo—has grown as well,

standing today as the premier marketer of refreshment beverages, juices and snack

foods.

PepsiCo got its start in 1965, when Pepsi-Cola and Frito-Lay merged to create a new

company. Since then, PepsiCo, Inc. has continued to grow, adding new brands and

product lines. Tropicana Products, Inc. joined the PepsiCo portfolio in 1998 and gives

PepsiCo the strongest brand name in juice.

The company hit a grand slam with its merger with The Quaker Oats Company in 2001,

bringing together two incredibly strong and successful food and beverage companies. The

PepsiCo-Quaker union added the powerful Gatorade thirst quencher and its Quaker brand,

a symbol of healthy eating that extends PepsiCo's reach into breakfast, on-the-go foods,

and snacks for kids.

Today, PepsiCo is a $43 billion company, employing more than 198,000 people speaking

more than 40 languages around the globe. The company is consistently recognized for its

corporate citizenship, philanthropic efforts and diversity programs.