Winning Through Differentiation

How Dr Pepper Fought the Cola Duopoly

Author

Andy McCotter-Bicknell
August 16, 2023 • Estimated Reading Time: 3 minutes

The “Coke vs. Pepsi” story has been over-explained

Consumers have been forced to take a side, documentaries have been filmed, articles have been written…

And Dr Pepper wants no part of it.

They’ve distanced themselves from the cola wars, leaned into differentiation, and now sit comfortably in third place according to U.S. market share data from NielsenIQ.

Their strategy wasn’t always this clear though.

Despite first being served in 1885 (one year before Coca-Cola), Dr Pepper didn’t see immediate success like Coke and Pepsi did.

Their messaging was by-the-books and similar to other sodas at the time. And they also had limited distribution compared to Coke and Pepsi, focusing more on Texas and the surrounding states. This was common for sodas at the time, as many bottlers that worked with Coke and Pepsi were barred from partnering with competitors.

But then in the 1960s, they got their first big win from differentiating.

By arguing that they weren’t a “cola,” they were able to legally open up PepsiCo and Coca-Cola bottlers and expand distribution across the country.

And that’s where things got really interesting

They continued marketing themselves as an alternative to colas throughout the 1970s, and business boomed. So much so that in the 1980s, Coca-Cola tried acquiring them.

But after the deal was blocked by the FTC, Dr Pepper merged with 7Up instead—another highly differentiated soda, famous for their “Uncola” campaign.

Dr Pepper hasn’t completely removed itself from colas though. In fact, it partners with PepsiCo to distribute its brand to restaurants.

Why? Most restaurant chains sign exclusivity contracts with either Coca-Cola or Pepsi in exchange for a discount. By partnering with PepsiCo for distribution, Dr Pepper can reap the benefits of wider distribution without forcing restaurants to serve their soda exclusively.

Today, Dr Pepper is manufactured and distributed under Keurig Doctor Pepper and shows no signs of slowing down.

đź’šAndy

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