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Soft Drink Industry

SOFT DRINK INDUSTRY

SOFT DRINK INDUSTRY, the production, marketing, and distribution of nonalcoholic, and generally carbonated, flavored, and sweetened, water-based beverages. The history of soft drinks in the United States illustrates important business innovations, such as product development, franchising, and mass marketing, as well as the evolution of consumer tastes and cultural trends.

Many Europeans long believed natural mineral waters held medicinal qualities and favored them as alternatives to often-polluted common drinking water. By 1772, British chemist Joseph Priestley invented a means to synthetically carbonate water, and the commercial manufacturing of artificial mineral waters began with Jacob

Schweppe's businesses in Geneva in the 1780s and London in the 1790s. The first known U.S. manufacturer of soda water, as it was then known, was Yale University chemist Benjamin Silliman in 1807, though Joseph Hawkins of Baltimore secured the first U.S. patent for the equipment to produce the drink two years later. By the 1820s, pharmacies nationwide provided the beverage as a remedy for various ailments, especially digestive.

Though the drinks would continue to be sold in part for their therapeutic value, customers increasingly consumed them for refreshment, especially after the 1830s, when sugar and flavorings were first added. Soda fountains emerged as regular features of drugstores by the 1860s and served beverages flavored with ginger, vanilla, fruits, roots, and herbs. In 1874 a Philadelphia store combined two popular products to make the first known ice-cream soda. The first cola drink appeared in 1881.

In the late 1800s, several brands emerged that were still popular a century later. Pharmacists experimenting at local soda fountains invented Hires Root Beer in Philadelphia in 1876, Dr. Pepper in Waco, Texas, in 1885, Coca-Cola in Atlanta, Georgia, in 1886, and Pepsi-Cola in New Bern, North Carolina, in 1893, among others. Reflecting two of the middle-class mores of the periodtemperance and feeling overwhelmed by the pace and burdens of modern lifeearly marketing touted these drinks as alternatives to alcohol and/or as stimulants. Coca-Cola inventor John S. Pemberton's first print advertisement for his creation read "Delicious! Refreshing! Exhilarating! Invigorating!," while Asa Candler, the eventual founder of the Coca-Cola Company, promoted his product in the years leading up to Prohibition as "The Great National Temperance Beverage."

The history of Coca-Cola reveals how national markets in soft-drink brands developed. To limit the cost of transportation, manufacturers of syrup concentrates licensed bottlers to mix the product, package, and distribute it within a specific territory. Candler underestimated the importance of the bottling side of the business and in 1899 sold the national rights to bottle Coke for a fairly small sum to Benjamin F. Thomas and Joseph B. Whitehead, who then started a national network of bottlers, creating the basic franchising format by which the industry is still run.

Candler and his successor after 1923, Robert Woodruff, were aggressive and innovative in marketing Coke as a leading consumer product and cultural icon. Coupons for free samples and giveaways of items bearing the drink's name and logo publicized the beverage, and pioneering efforts in market research helped define how best to take advantage of advertising and promotions. During World War II, Woodruff opened bottling operations overseas to supply U.S. military personnel, and after the war, Coke was poised to enter these international markets, not only as a consumer product, but also as a symbol of "the American Century."

After World War II, the soft-drink industry became a leader in television advertising, the use of celebrity endorsements, catchy slogans, tie-ins with Hollywood movies, and other forms of mass marketing, particularly focusing on young consumers and emphasizing youth-oriented themes. As health and fitness consciousness and environmental awareness became popular, the industry responded with sugar-free and low-calorie diet sodas, beginning in the 1960s, and later, caffeine-free colas and recyclable containers.

The most famous rivalry within the industry has been between Coke and Pepsi, which waged two rounds of "cola wars" in the twentieth century. In the 1930s and 1940s, Pepsi challenged the industry leader by offering a twelve-ounce bottle for the same five-cent price as Coke's standard six ounces. In the 1970s and 1980s, "Pepsi challenge" taste-tests led Coke to change its formula in 1985, a campaign that failed because it underestimated the attachment Coke drinkers had to the tradition and symbolism of the brand.

In 2001, the soft-drink industry included approximately five hundred U.S. bottlers with more than 183,000 employees, and it achieved retail sales of more than $61 billion. Americans that year consumed an average of 55 gallons of soft drinks per person, up from 48 in 1990 and 34 in 1980. The nine leading companies accounted for 96.5 percent of industry sales, led by Coca-Cola with more than 43 percent of the soft drink market and Pepsi with 31 percent. Seven individual brands accounted for almost two-thirds of all sales: Coca-Cola Classic (itself with nearly 20 percent of the market), Pepsi-Cola, Diet Coke, Mountain Dew (a Pepsi product), Sprite (a Coca-Cola product), Dr. Pepper, and Diet Pepsi. Domestic sales growth slowed in the late 1990s because of increased competition from coffee drinks, iced teas, juices, sports drinks, and bottled waters. The industry continues, however, to tap lucrative international markets; Coke and Pepsi each have bottling operations in more than 120 countries.

BIBLIOGRAPHY

Jorgensen, Janice, ed. Encyclopedia of Consumer Brands. Volume 1: Consumable Products. Detroit, Mich.: St. James Press, 1994. Features short but detailed histories of many individual brands.

Pendergrast, Mark. For God, Country, and Coca-Cola: The Unauthorized History of the Great American Soft Drink and the Company That Makes It. New York: Scribners, 1993.

Tchudi, Stephen N. Soda Poppery: The History of Soft Drinks in America. New York: Scribners, 1986.

Tedlow, Richard S. New and Improved: The Story of Mass Marketing in America. New York: Basic Books, 1990.

Jeffrey T. Coster

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