Why Pepsi Went Bankrupt

here's the truth Pepsi don't want you to know Pepsi started off as a ripoff of Coca-Cola and they even tried to sell their company to Coca-Cola on three separate occasions but Coke kept turning them down as a result Pepsi struggled and literally went bankrupt on two separate occasions and yet fast forward to present day and PepsiCo makes around 80 billion dollars of Revenue a year more than double the Coca-Cola Company you see Pepsi is no longer just a drinks business they are a gigantic Empire that owns more food and beverage products than you can even imagine lays Gatorade Cheetos Aquafina Tropicana Quaker Oats Mountain Dew Doritos the Brand's PepsiCo owns are endless in fact at one point Pepsi even started buying giant fast food chains like KFC and Pizza Hut they were even negotiating a deal to buy a huge Fleet of Navy warships so how did all of this happen how did Pepsi go from bankruptcy to global domination from humble beginnings to controversial conglomerate with blood on its hands welcome to the insane history of Pepsi [Music] foreign with a man named Caleb D Bradham who was born in 1867. Caleb grew up in a very small farming town in North Carolina his father worked as a local Merchant but his family was very wealthy and because of this Caleb was able to receive the best education and went off to become a doctor at the University of North Carolina however his father suddenly ran into financial trouble and could no longer afford to make the tuition payments so Caleb was forced to drop out of school despite this when he returned to his small town the locals treated him as if he actually was a qualified doctor because there was no other doctor available for miles around so Caleb gave out medical advice whilst also working as a local teacher so he could save up money within two years he'd earned enough money to go back to college but this time he decided he didn't actually want to be a doctor anymore maybe it was because of years of helping the local residents with their medical problems but Caleb had decided he now wanted to become a pharmacist instead so after graduating in 1892 at age 25 Caleb Bradham purchased a building in New Bern North Carolina to open the Bradham pharmacy at the time drugstores like this were incredibly popular and were a place where locals would actually hang out and socialize it was common to have a counter for people to sit and chat whilst having some snacks and a cold drink that's because most of the pharmacies had a soda fountain where soda was made by mixing carbonated water with whatever flavor the customers chose and there were hundreds of flavor syrups to choose from like orange grape Rose and countless more Caleb it was a very social person so by running a pharmacy of his own he quickly made friends with nearly everyone in the town now that exact same year Caleb started his Pharmacy business 1892 the Coca-Cola company was founded in Atlanta Georgia they had developed a cola syrup recipe that was sold at Pharmacy soda counters and so it wasn't long before Caleb Bradham had been introduced to Coca-Cola's drink Caleb very quickly saw the huge potential of it it was immediately a popular choice amongst customers when deciding what to order from the soda fountain but Caleb thought the only problem was that the original founder of Coca-Cola had mixed addictive chemicals into the recipe so Caleb had the idea to make his own very similar version of cola syrup but leave out the ingredients he considered harmful because Caleb wanted to make a true health drink that relieves indigestion but had the same color flavor that everyone seemed to love and thus Caleb's Cola syrup was a mix of natural flavors like caramel rare oils and fruit juice extract once Caleb settled on the formula he started to offer it as a new flavor at the soda counter in his Pharmacy and encouraged his friends to try it the locals nicknamed his Cola beverage Brad's drink in reference to the surname of its creator Caleb Bradham and for the next five years the locals would regularly request Brad's drink at the pharmacy soda fountain simply because they like the taste after years of hearing the locals tell him how good it was Caleb finally built up the confidence to try to sell his product elsewhere by this time Coca-Cola was growing massively successful and Caleb knew that there was a demand for more Cola drinks on the market so in 1898 he officially changed the name of his product to Pepsi Cola the word Pepsi comes from the Greek word Pepsis which means Digest because at this point Caleb still believed focusing on the health aspect was going to be key however what actually was most popular was The Taste and before long he was selling large kegs of Pepsi syrup to supply other soda fountains across the country for years Caleb was creating Pepsi Cola in the back room of his Pharmacy and in 1903 Caleb officially established the Pepsi Cola Company he closed down his Pharmacy so he could fully focus on Pepsi in the first year as an actual registered company they sold over 8 000 gallons of syrup and Caleb reinvested his earnings into advertising in local newspapers which helped the brand grow even more sales more than doubled to 20 000 gallons of syrup in 1904 and Pepsi was now far too big of an operation to run out of the pharmacy so Caleb bought a bigger building to use as a factory to produce Pepsi in larger quantities he also partnered with botling companies who wanted to be part of the Pepsi franchise thus allowing Pepsi to be sold by the bottle instead of just as a syrup salted soda fountains by 1910 Pepsi Cola was working with 250 bottling companies across 20 24 States and by 1915 Pepsi cola's assets were worth more than one million dollars Caleb Bradham bought a big house for his wife and children to live in and he was so popular in the local area people were encouraging him to run as the governor of North Carolina by all accounts Caleb had made it but that all changed after the start of World War One during the war the price of sugar skyrocketed due to strict rations before the war a pound of sugar cost just five cents but during the ration it jumped to 22 cents per pound and the price seemed to be increasing every month so Caleb assumed that the price would continue to rise and he decided to pour huge amounts of money into stockpiling more sugar if his theory was right that the price of sugar would keep increasing like this all the sugar he'd bought would soon be extremely valuable he'd also be able to produce his drink much cheaper than any competitors who would be paying way higher prices for their sugar however Caleb's theory was completely wrong just six months later the sugar price crashed down to three cents per pound making it even cheaper than before the war started to make matters worse most factories in America had to prioritize making products for the war effort so Pepsi went from having 250 bottling factories to just two so the amount of product they could sell was drastically cut down basically Caleb had spent more on sugar than what the company was able to earn they couldn't use it all and the current market price for that sugar was way below what he paid for it things spiraled out of control and in 1920 Pepsi Cola filed for bankruptcy Caleb was 53 at this point and he had to sell off all the remaining company assets like the Pepsi trademark and drink formula and thus Caleb returned to his old career as a pharmacist by 1934 Caleb was dead and so the original creator of Pepsi never got to see the insane success his company would soon go on to have I wonder [Music] after acquiring what was left of a Pepsi company for eight straight years the new owners desperately tried to increase the value of the business but when the stock market crashed in 1929 and suddenly the economic situation was looking very Bleak at this point Pepsi had just one bottling plant in Richmond Virginia and they were failing to make a profit so Pepsi declared bankruptcy a second time and they were forced to sell Pepsi to The Loft candy company in 1931. so Pepsi had now gone bankrupt twice with two different owners and had now been passed on to a third different owner however for Pepsi's biggest competitor Coca-Cola things were looking much brighter whilst Pepsi had been struggling so much through World War One and the Great Depression Coke had managed to secure a wartime contract with the United States government to sell Coke overseas and so they've been expanding all over the world of course the new owners of Pepsi were desperate to make money back on their investment and after seeing Coke's success they thought they'd come up with the perfect solution sell Pepsi to Coca-Cola throughout the 1920s and 30s there were three separate attempts to sell Pepsi to Coca-Cola but they refused every time in retrospect imagine how much money Coke could have saved themselves if they bought out their future biggest Rivals when they had the chance but at the time understandably no one believed that Pepsi could turn their luck around so when Coke rejected the chance to buy Pepsi three separate times eventually the Pepsi owners The Loft candy company realized they needed to try and find another way to save the business one of the first great decisions they made was when Pepsi began using recycled beer bottles to save money on production costs this meant they were able to charge just five cents for a 12 ounce bottle of Pepsi that was twice the amount of soda that was offered in a Coca-Cola bottle for the same price remember the Great Depression was still going on at the time so people were looking to save money any way they could so buying Pepsi instead of coke was an obvious choice for a lot of people given they were getting double the amount the next important decision by Pepsi was their heavy investment in advertising campaigns has this really helped the company take off there were Billboards skywriting a comic strip and even a popular new jingle that played over the radio basketball history for you this Pepsi Cola radio jingle was just 15 seconds long in total so it was cheaper to buy than the typical 60-second advertisement this way Pepsi were able to pay more radio stations Across America to run these ads over and over again until people had the jingles stuck in their heads however now that the Pepsi company was growing in popularity Coca-Cola obviously wasn't happy about losing business to Pepsi so in 1938 Coca-Cola took Pepsi-Cola to court for trademark infringement over their use of the word Cola obviously Coke are known about Pepsi cola's name for years but they hadn't bothered to sue them until now because until now they didn't think Pepsi was any sort of threat but it was quickly becoming Clear Pepsi was cutting into Coke sales so in court Coca-Cola argued that Pepsi was infringing on their copyright while Pepsi counted that coke was trying to form an illegal Monopoly over the entire Cola into industry in the end Pepsi Cola got to keep its name although they eventually shortened the name to just Pepsi but there was trouble on the horizon for Pepsi in 1939 World War II began and after what happened with the sugar rationing in World War One you might think that another War would spell another disaster for Pepsi but this time around they came up with a clever plan to stay in business Pepsi decided to change the colors of their brand to red white and blue to show their patriotism they also set up a campaign called your man in service where Pepsi installed recording booths all around the United States so that soldiers could record a message to their family for free this obviously generated a lot of Goodwill and patriotism towards Pepsi then during the 1940s Pepsi also made the very successful decision to Market their drink to the African-American community and hired an all-black sales and marketing team to create the ads this was huge because most of Pepsi's competitors only featured black people in the form of stereotypes so the African-American Community was a huge untapped Market that most other brands were ignoring with all of these successful advertising campaigns Pepsi was able to make get through World War II stronger than ever they were just getting started [Music] foreign fifty Pepsi hired a man named Alfred Steele as the new CEO this was slightly controversial as he was the former vice president of Coca-Cola unless Alfred was an expert on what it took to make a Cola Company successful and he quickly made several changes to the Pepsi brand in particular he liked to focus on giant advertising campaigns and big sales promotions he started introducing beautiful and glamorous women to Pepsi advertisements and Alfred still also just so happened to be married to the famous actress Joan Crawford so he brought her on as a model for Pepsi too since she was one of the biggest names in Hollywood her celebrity endorsement of the products massively boosted sales Alfred also pushed for a brand new logo and slogan they completely redesigned a swirl bottle which made the drink look more stylish Alfred's extensive ad campaigns and branding changes helped Pepsi grow out of its Poor Man's color image that some people associated with Pepsi he also made changes behind the scenes like giving teams within Pepsi's company more autonomy thus empowering them to bring new ideas forward all of these changes helped increase Pepsi's sales from 1.

6 million in 90 150 to 11. 5 million dollars in 1958. Alfred Steele is remembered for being one of the most successful CEOs in all of Pepsi history without him the brand might not be what it is today but sadly his career was short-lived because he died of a heart attack in 1959 so it was time for Pepsi to find new leadership and the job soon fell to a man named Don Kendall who'd been with Pepsi for his entire career he'd worked his way up the corporate ladder from a syrup salesman all the way to Pepsi president and then CEO and one of his first decisions was quite surprising Don decided to bring Pepsi to the Soviet Union it was of course a massive market and importantly a market Coca-Cola had not entered now that was largely because this was during the Cold War and so there was actually an organization called The House Un-American Activities Committee which would make sure that U.

S businesses had nothing to do with the Soviet Union however that changed in 1959 when U. S president Dwight Eisenhower wanted to bring American culture to the Soviet Union and show them the benefits of capitalism and thus they hosted the 1959 American National X exhibition in Moscow Pepsi's new leader Don Kendall saw this exhibition as a big opportunity to introduce Pepsi to the Soviet Union and he was right there's even a photo of the former Soviet leader sampling Pepsi for the first time during this exhibition and after this successful introduction at the exhibition Pepsi managed to agree a deal with the USSR where Pepsi would become the very first American brand to be sold in the Soviet Union however there was one big problem because of controls the Kremlin put on their currency at the time the Soviet Ruble it was actually illegal to trade their currency globally meaning there was literally no International Currency Exchange Market for the ruble unless it was essentially worthless outside the USSR and Pepsi certainly didn't want to be stuck with profits that they couldn't take out of the Soviet Union so instead of selling Pepsi to the Soviet Union for cash they agreed to use a barter system for years Pepsi accepted stolench near vodka as payments and Pepsi also received exclusive rights to distribute this vodka in the United States so basically the Soviet Union got Pepsi concentrates and in return Pepsi got and vodka which they could sell in the US and therefore make US dollars from it and so this workaround seemed win-win as Pepsi could sell their product in the Soviet Union whilst bypassing the currency issue and for a while this was all well and good until 1979 where Pepsi became unable to sell enough of the Vodka for this deal to make Financial sense anymore so they needed to figure out something else they could receive from the USSR instead ideally something more valuable so Pepsi could very quickly sell it for dollars now there is a long-standing story that in 1989 the Soviet government paid Pepsi by giving them a fleet of decommissioned warships the idea was Pepsi would be able to make money from selling the ships for scrap metal and this was reported in the New York Times saying PepsiCo recently bought from the Soviets 17 submarines Cruiser a frigger and a destroyer they are being resolved for scrap the head of Pepsi then joked to George Bush's National Security advisor where disarming the Soviet Union faster than you are and so because of this warship deal worth hundreds of millions of dollars articles have popped up saying that Technic quickly Pepsi briefly became the sixth largest military in the world before they sold the ships for scrap metal however this isn't actually the case although Pepsi having its own Navy Fleet would take the meaning of Kohler Wars to a whole new level the actual truth seems to be that even though Pepsi considered this warship deal they didn't go through with that instead they drew up a new agreement for the Soviet Union to build Pepsi commercial freight ships instead which they could sell all these out and ironically all of this was completely irrelevant anyway as the plan fell through when a few months later the Soviet Union collapsed in 1991.