Saturday, January 20, 2007

History of Pepsi Cola

One of New Bern’s most trumpeted achievements was the invention of Pepsi-Cola. The summer of 1898, as usual, was hot and humid in New Bern, North Carolina. So a young pharmacist named Caleb Bradham began experimenting with combinations of spices, juices, and syrups trying to create a refreshing new drink to serve his customers.

He planned to use the drink to cure upset stomachs.

He succeeded beyond all expectations because he invented the beverage known around the world as Pepsi-Cola. Caleb Bradham knew that to keep people returning to his pharmacy, he would have to turn it into a gathering place.

His creation, a unique mixture of kola nut extract, vanilla and rare oils. It was not originally name Pepsi. He named it after himself and called it ‘Brad ‘s Drink.’ Caleb decided to rename it "Pepsi-Cola," after its two main ingredients, pepsin and the cola nut and advertised his new soft drink. People responded, and sales of Pepsi-Cola started to grow, convincing him that he should form a company to market the new beverage.

In 1902, he launched the Pepsi-Cola Company in the back room of his pharmacy, and applied to the U.S. Patent Office for a trademark.

At first, he mixed the syrup himself and sold it exclusively through soda fountains. But soon Caleb recognized that a greater opportunity existed to bottle Pepsi so that people could drink it anywhere.

The business began to grow, and on June 16, 1903, "Pepsi-Cola" was officially registered with the U.S. Patent Office. That year, Caleb sold 7,968 gallons of syrup, using the theme line "Exhilarating, Invigorating, Aids Digestion."

In 1904, Caleb Bradham purchased the Bishop Factory at Johnson and Hancock Streets, converting it into the first Pepsi Cola factory.

He also began awarding franchises to bottle Pepsi to independent investors, whose number grew from just two in 1905, in the cities of Charlotte and Durham, North Carolina, to 15 the following year, and 40 across the United States by 1907. By the end of 1910, there were Pepsi-Cola franchises in 24 states with 300 bottles.

Building a strong franchise system was one of Caleb's greatest achievements. Local Pepsi-Cola bottlers, entrepreneurial in spirit and dedicated to the product's success, provided a sturdy foundation.

They were the cornerstone of the Pepsi-Cola enterprise. By 1907, the new company was selling more than 100,000 gallons of syrup per year.

Growth was phenomenal, and in 1909 Caleb erected a headquarters so spectacular that the town of New Bern pictured it on a postcard. Famous racing car driver Barney Oldfield endorsed Pepsi in newspaper ads as "A bully drink...refreshing, invigorating, a fine bracer before a race."

The previous year, Pepsi had been one of the first companies in the United States to switch from horse-drawn delivery cart to motor vehicles, and Caleb's business expertise captured widespread attention.

He was even mentioned as a possible candidate for Governor. A 1913 editorial in the Greensboro Patriot praised him for his "keen and energetic business sense."

Pepsi-Cola enjoyed 17 unbroken years of success. Caleb now promoted Pepsi sales with the slogan, "Drink Pepsi-Cola. It will satisfy you." Then came World War I, and the cost of doing business increased drastically. Sugar prices see sawed between record highs and disastrous lows, and so did the price of producing Pepsi-Cola.

The price sugar reached 26 cents per pound in 1920. Unfortunately, Bradham gambled on the fluctuations of sugar prices during World War I, betting that sugar prices would continue to rise, but they fell instead. He purchased large blocks of sugar stock, only to watch price plummet to 2 cents per pound by the end of the year.

Pepsi-Cola declared bankrupt in 1923. The assets were sold to a North Carolina Company who, in turn sold the operation to a Wall Street broker for $35,000.

By 1931, only two plants remained open. Five a year later the company bankrupt again and it wasn't until a successful candy manufacturer, Charles G. Guth, appeared on the scene that the future of Pepsi-Cola was assured.

Guth was president of Loft Incorporated, a large chain of candy stores and soda fountains along the eastern seaboard. He saw Pepsi-Cola as an opportunity to discontinue an unsatisfactory business relationship with the Coca-Cola Company, and at the same time to add an attractive drawing card to Loft's soda fountains. He was right. After five owners and 15 unprofitable years, Pepsi-Cola was once again a thriving national brand.

The formula for Pepsi was change at this time. The new formula eliminated pepsin as a major ingredient. By 1934, Pepsi-Cola had turned the corner and began purchasing bottling operation throughout the United States.

One oddity of the time, for a number of years, all of Pepsi-Cola's sales were actually administered from a Baltimore building apparently owned by Coca-Cola, and named for its president.

Within two years, Pepsi would earn $1 million for its new owner. With the resurgence came new confidence, a rarity in those days because the nation was in the early stages of a severe economic decline that came to be known as the Great Depression.

Pepsi’s net earning had risen to more than $5.5 million by 1939.

Today, the company is a diversified conglomerate with a complete product line across the food and beverage categories. Pepsi is one of the most popular drinks in the world.

The company also have non-carbonated rink Gatorade, acquired with the purchase of Quaker Foods, leading the sport drinks market.
History of Pepsi Cola

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