BACKGROUND AND HISTORY OF PEPSI COLA

Caleb Bradham of New Bern, North Carolina was a pharmacist. 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 beverage was something he called "Brad's drink" made of carbonated water, sugar, vanilla, rare oils, and pepsin and cola nuts.On August 28, 1898, Caleb renamed his drink Pepsi-Cola, after a combination of two ingredients, pepsin and cola. He believed his drink was healthy as it aided in digestion much like the pepsin enzyme does. In 1898, Caleb Bradham wisely bought the trade name "Pep Cola" for $100 from a competitor in Newark, New Jersey that had gone broke. His assistant James Henry King, a young African American was the first to taste the new drink.

In 1902, Bradham launched the Pepsi-Cola Company in the back room of his pharmacy and on December 24, 1902 the Pepsi-Cola Company was incorporated in the state of North Carolina. The business began to grow, and on June 16, 1903, "Pepsi-Cola" was officially registered with the U.S. Patent Office. At first, he mixed the syrup himself and sold it exclusively through soda fountains. That first year, Bradham sold 7,968 gallons of syrup, using the theme line "Exhilarating, Invigorating, Aids Digestion." He also expanded his operation by opening a second Drug Store at the corner of Middle and Broad Streets. Caleb soon recognized that a greater opportunity existed to bottle Pepsi so that people could drink it anywhere. In 1905, Bradham began selling Pepsi-Cola in six-ounce bottles and awarded two franchises to Charlotte and Durham, North Carolina. The following year, 15 franchises were awarded, with another 40 by 1907. In 1910 there were 250 franchises in 24 states and in January of that year the Pepsi Cola Company held their first Bottler Convention in New Bern.Caleb Bradham enjoyed 17 years of success with Pepsi-Cola. However, he had gambled on the fluctuations of sugar prices during WWI. He believed that sugar prices would continue to rise, but they fell drastically, leaving him with an overpriced sugar inventory. Pepsi Cola went bankrupt in 1923 and its assets were sold to Craven Holding Corporation for $30,000.In 1931, at the depth of the Great Depression, the Pepsi-Cola Company entered bankruptcy in large part due to financial losses incurred by speculating on wildly fluctuating sugar prices as a result of World War I. Assets were sold and Roy C. Megargel bought the Pepsi trademark. Megargel was unsuccessful, and soon Pepsi's assets were purchased by Charles Guth, the President of Loft, Inc. Loft was a candy manufacturer with retail stores that contained soda fountains. He sought to replace Coca-Cola at his stores' fountains after Coke refused to give him a discount on syrup. Guth then had Loft's chemists reformulate the Pepsi-Cola syrup formula.On three separate occasions between 1922 and 1933, The Coca-Cola Company was offered the opportunity to purchase the Pepsi-Cola company, and it declined on each occasion.During the Great Depression, Pepsi gained popularity following the introduction in 1936 of a 12-ounce bottle. With a radio advertising campaign featuring the jingle "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", arranged in such a way that the jingle never ends. Pepsi encouraged price-watching consumers to switch, obliquely referring to the Coca-Cola standard of 6.5 ounces per bottle for the price of five cents (a nickel), instead of the 12 ounces Pepsi sold at the same price. Coming at a time of economic crisis, the campaign succeeded in boosting Pepsi's status. From 1936 to 1938, Pepsi-Cola's profits doubled. Pepsi's success under Guth came while the Loft Candy business was faltering. Since he had initially used Loft's finances and facilities to establish the new Pepsi success, the near-bankrupt Loft Company sued Guth for possession of the Pepsi-Cola company. A long legal battle, Guth v. Loft, then ensued, with the case reaching the Delaware Supreme Court and ultimately ending in a loss for Guth. Loft won the suit and on May 29, 1941 formally absorbed Pepsi into Loft, which was then re-branded as Pepsi-Cola Company that same year. (Loft restaurants and candy stores were spun off at this time.) In the early 1960s, the company's product lines expanded with the creation of Diet Pepsi and purchase of Mountain Dew. In 1965, the Pepsi-Cola Company merged with Frito-Lay, Inc. to become PepsiCo, Inc., the company it is known as at present.

PEPSI HIERARCHY

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