The Pepsi-Cola story began in NewBern, North Carolina.

A pharmacist named Caleb Brad-ham operated a drug store and sodafountain.

Bradham often experimented withexotic oils and fruit extracts hoping tomake a soft drink that tasted goodand was good for you, too.

One of his creations became popu-lar among the local patrons, whichthey called Brad’s Drink.

In 1898, the drink wasrenamed Pepsi-Cola.

The first known Pepsi-Cola newspa-per advertisement appeared in 1902.The ad proclaimed the health bene-fits of Pepsi-Cola.

In 1903, Bradham registered thePepsi-Cola name with the UnitedStates Patent and Trademark Office.

That same year, the Pepsi-Colascript was used in a newspaperad for the first time.

Early in the 20th century, major ad-vancements in the soft drink industrymade bottling a viable alternative tofountain drinks. In 1905, Pepsi-Colawas made available in bottles

To take advantage of this newmarket, Bradham began offeringbottling franchises.

By 1909, there were 250 Pepsi-Colabottlers in 24 states.

The Pure Food and Drug Act wasadopted in 1906. The new law forcedmany soft drink manufacturers to changetheir formula.

The Pepsi-Cola formula met the newrequirements and did not need to bealtered.

Between 1905 and 1910, the Pepsi-Cola Com-pany experienced phenomenal growth andprofits. These profits were used to improvePepsi-Cola advertising.

In 1908, famous racecar driver, BarneyOldfield became the first celebrity endorserfor Pepsi-Cola.

Unfortunately, the amazing growth experi-enced by the Pepsi-Cola Company duringthe early 1900’s came to an abrupt halt withthe onset of World War I. With the warcame price controls and sugar rationing.

By the end of World War I, the Pepsi-Cola Com-pany was in dire financial straights. The condi-tions were made worse by an unstable sugarmarket. By 1923, the Pepsi-Cola Company wasbankrupt.

Roy Megargel, a wall street financier,headed a group of investers that pur-chased the Pepsi-Cola trademark and for-mula from the bankruptcy.

In 1923, Pepsi-Cola headquarters movedto Richmond, Virginia, where Megargeltried to revive the Pepsi-Cola Company.

Guth wanted a volume discount from theCoca-Cola Company. Coke refused. Guthwould not take no for an answer.

Aware that Pepsi-Cola was bankrupt,Guth made an agreement withMegargel to buy the Pepsi-Colatrademark and formula. In August of1931, Guth formed a new Pepsi-ColaCompany, and replaced Coca-Colain all the Loft stores.

Loft operated a chain of candy storesin the New York metropolitan areathat dispensed Coca-Cola at theirsoda fountains.

Guth realized he had stumbled ontosomething big – a 12-ounce bottlefor a nickel.

To keep cost down, Guth purchased usedbeer bottles. He was able to buy them fora penny each. With a deposit of 2 cents,they sometimes made more profit on thedeposit than the Pepsi-Cola. He decidedto market Pepsi-Cola nationwide. Initially,he used distributors, but he soon realizedhe needed a network of bottlers across theUnited States.

He hired territorial representativeswho proceeded to sign up bottlersthroughout the country.

Qualified individuals were given the op-portunity to become Pepsi-Cola bottlersfor the sum of $315.

For their investment, a new bottlerreceived one unit of concentrateand enough crowns and labels toproduce 1200 cases of Pepsi-Cola.

Between 1934 and 1939, over350 Pepsi-Cola Bottling fran-chises were issued. Sales werebooming.

Pepsi-Cola bottlers operated on a smaller profitmargin than their competitors. The key to theirsuccess was increased volume. In 1939, Pepsi-Cola made a concerted effort to develop the take-home market to increase volume.

That same year, Walter Mack becamepresident of the Pepsi-Cola Company.Mack’s top priority was Pepsi-Cola ad-vertising.

Pepsi-Cola signed an exclusive agreementwith a skywriting company to write the Pepsi-Cola name in the sky. At that time, the use ofskywriting for advertising was unheard of.Because of this, every time the Pepsi-Colaname appeared in the sky, it made the newsin the local papers.

One of Mack’s big ideas for advertising Pepsi-Cola was to use Popeye. Instead of eatingspinach for his strength, Popeye would drinkPepsi-Cola. The asking price for the rights to usePopeye was more than Pepsi-Cola could afford.Instead, they came up with Pepsi and Pete, thePepsi-Cola cops. Pepsi and Pete ran in the Sun-day comics from 1939 to 1951.

An ad agency presented Mack with aradio commercial that was 45 seconds ofspoken word, and 15 seconds of a jingle.Mack did not like the spoken part of thecommercial, but he loved the jingle. Heasked the ad agency to trim the commer-cial down to the 15 second jingle. Thepublic loved it!

The jingle was so popular that it wasinstalled in juke boxes – where peo-ple paid to listen to it.

In 1943, Pepsi-Cola decided to reenter thefountain business. Because of the war, theywere unable to get enough men and equipmentto market fountain Pepsi-Cola. They turned tothe bottlers and offered them fountain franchiseagreements.

Finally, in the summer of 1945, the warended. The United States celebratedthe victory, and the Pepsi-Cola Companyprepared for the future. They believedthe worst was behind them, and wereoptimistic about their prospects. How-ever, post war inflation presented thePepsi-Cola with a challenge they werenot prepared for.

Consumers believed that a soft drink should cost5 cents, despite the size. But Pepsi-Cola bottlerswere selling twice as much for the same price.As post war inflation drove up the cost of raw ma-terials, the small margin that Pepsi-Cola bottlersoperated on was being decimated. Somethinghad to give. Either they had to change the price,or change the size of the bottle. Pepsi-Cola’sreputation was built on the “big nickel drink.”

Some bottlers opted to sell the 12-ounce bottlefor 6 cents, while others decided to try to sell a10-ounce bottle for a nickel. The 10-ounce bottlewas the same height as the 12-ounce bottle, butslimmer. The 10-ounce bottle was a success forbottlers and consumers alike. It still gave theconsumers the big drink they wanted, and it gavethe bottlers the profit they needed.

Mack wanted to sell Pepsi-Cola to every-body. He did not see color – he only sawcustomers. He felt the African-Americancommunity was a source of potential sales.He created advertising for this market thatwas not demeaning or condescending. Herecruited a sales force of African-Americanmen to promote Pepsi-Cola within theAfrican-American community. This helpedto break the color barrier in corporateAmerica.

By 1949, Pepsi-Cola profits were almost non-ex-istent. The lack of profits and the internal battleover the price of the 12-ounce bottle causedmany to lose confidence in Mack. In 1950, AlSteele became president of the Pepsi-Cola Com-pany.

Many believed that Steele was hired to dismantlethe Pepsi-Cola Company. The opposite was true.Steele was there to transform Pepsi-Cola into amodern soft drink company. The first thing he didwas to update the trademark and reformulatePepsi-Cola. He believed that Pepsi-Cola was toosweet for the modern consumer.

In 1953, Pepsi-Cola introduced the adver-tising slogan, “The Light Refreshment.”This referred to a new Pepsi-Cola formulathat contained less sugar. During the1940’s, Pepsi-Cola had a reputation as abargain-basement drink. Steele hoped thisnew advertising would not only increasesales, but would improve the image ofPepsi-Cola.

One of the big problems Pepsi-Cola faced at thistime was a lack of consistency. The look of thePepsi-Cola trucks, the uniform of its route sales-men, and the taste of the product were differentdepending on which part of the country you werein. Steele set up standards for the look of thetrucks and uniforms. He employed mobile labs totravel around the country to test product quality.

In 1955, Steele married Hollywood legend, JoanCrawford. Crawford brought some Hollywoodglamour to the Pepsi-Cola Company. Every-where Steele and Crawford traveled, thousandsof people would be there to see the businessmanand the actress. She was invited to the openingsof new Pepsi-Cola bottling facilities. When shecut the ribbon, scores of reporters were there torecord the event.

To further enhance the new, mod-ern image of Pepsi-Cola, the swirlbottle was introduced in 1958.

The success achieved by the Pepsi-Cola Company in the 1950’s wasenormous. Case sales increased by182% between 1950 and 1959.Teem was introduced in 1959, whichgave Pepsi-Cola a lemon-lime drink.Unfortunately, Steele passed awaythat same year.

Prosperity and mobility in the 1960’s began atrend among consumers for more convenientpackaging. Pepsi responded by authorizingcontract canners to produce Pepsi-Cola. Addi-tionally, they began test marketing an assort-ment of sizes and styles of non-returnable glassbottles. By the end of the decade, Pepsi andPepsi bottlers began building their own canningfacilities.

Don Kendall became president of the Pepsi-ColaCompany in 1963. Kendall’s service with thecompany made him uniquely qualified. In 1947,he started in the fountain sales department. Overthe years, he held many different positions thatbrought him in contact with the bottlers. He de-veloped lasting relationships and a keen under-standing of bottler issues. When he becamepresident, the bottlers knew they had a friend atheadquarters.

The pivotal moment in Kendall’s ca-reer was when he was able to get theRussian premiere, Nikita Khrushchev,to sample Pepsi at the 1959 tradeexpo in Moscow.

In 1961, Pepsi decided to change the focus oftheir advertising from the product to the peoplethat consumed it. This philosophy inspired the“Come Alive! You’re in the Pepsi Generation” ad-vertising in 1964. This advertising campaignwas loved by consumers and critics alike. It com-pletely captured the spirit of the baby boomergeneration. Shortly after the introduction of theCome Alive theme, many in the media identifiedbaby boomers as the Pepsi Generation.

Prior to the 1960s, diet drinks wereconsidered drinks for those withmedical conditions. In the early1960s, some consumers decidedthey wanted sugar-free drinks.Pepsi responded in 1963 with DietPatio Cola. Sales were disappoint-ing. The funds for marketing DietPatio Cola were inadequate.

In 1964, Pepsi decided to change the name toDiet Pepsi. That was the first time a major softdrink company used their brand name on a dietproduct. By changing the name, Pepsi-Cola wasable to advertise Pepsi and Diet Pepsi together.

Many of Pepsi’s best ideas come from their bot-tlers. Mountain Dew is one of those great ideas.Mountain Dew was created by Tip Corporation,with the help of Pepsi-Cola bottlers in North Car-olina. The bottlers needed a product to competewith Sun Drop. Mountain Dew did that and more.In 1964, Don Kendall made a deal with Tip Cor-poration to purchase Mountain Dew.

The idea to merge Frito-Lay and Pepsi-Cola was the result of the friendship be-tween Don Kendall and Herman Lay. Theyhad met at an industry tradeshow. As theirfriendship grew, so did their desire to bringthe two companies together. In 1965,Pepsi-Cola merged with Frito-Lay and be-came PepsiCo. Wall Street called this “amarriage made in snack food heaven.”

The Pepsi Generation advertising continuedthroughout the 1970’s. In 1973, the slogan was“Join the Pepsi People Feelin’ Free. Undoubt-edly, the most memorable commercial of thiscampaign was “Puppies.” The commercial thataired on television was not the commercial theadvertising agency had planned. During theshooting of the commercial, the little boy acci-dently spilled Pepsi on himself. The puppies ea-gerly licked the spilled Pepsi off the boy, whichcaused the boy to giggle. They rewrote the com-mercial to incorporate this scene and as they say,the rest is history.

Dallas, Texas was a very tough market forPepsi. None of the advertising campaigns or pro-motions used by the local bottler increased sales.With nothing to lose, their advertising agencysuggested they try a taste test. Consumers wereasked to take the Pepsi Challenge. They weregiven unmarked cups of cola and then askedwhich one they preferred. Overwhelmingly, theparticipants preferred Pepsi. The results wereused in commercials. Sales shot up. The programwas so successful in Dallas that other Pepsi bot-tlers began to use the Pepsi Challenge. By 1978,the entire country wanted to take the Pepsi Chal-lenge.

When Roger Enrico became president of Pepsi-Cola in 1983, he believed Pepsi’s advertising hadlost its focus. The Pepsi Generation advertisingthat started in 1963 had lost the magic. Enricoasked Pepsi advertising guru, Alan Pottasch, torecreate the energy and magic of the originalPepsi Generation advertising. In 1984, “Pepsi-the Choice of a New Generation” was introduced.The new advertising campaign kicked off with thesigning of Michael Jackson to appear in a Pepsicommercial. Many believe that this was the tip-ping point that caused Coca-Cola to change their100 year old formula.

Roger Enrico became the CEO ofPepsiCo in 1987. Craig Weatherupwas selected to replace him as presi-dent of the Pepsi-Cola Company.Weatherup’s biggest challenge wasthe ever-increasing consumer desirefor more choices of refreshment bev-erages.

In 1991, Weatherup set Pepsi on a course to be-come a total beverage company. He expandedthe Pepsi portfolio to include waters, teas, andfruit drinks. Currently, the Pepsi portfolio includesover 188 different beverages, and scores of sizesand styles of packaging.

Today, Pepsi faces numerous challenges,from health and wellness to governmentmandates. Despite these issues, the fu-ture looks promising. The Pepsi Spirit isalive and well. Through innovation andhard work, the Pepsi story continues.

The End