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Legendary Losses: Biggest Losers In History

Khalid Elhassan July 25, 2023 32 min

Loser - The Battle of Red Cliffs — The Battle of Red Cliffs. Rebellion Research

The Coca-Cola CEO Who Declined to Buy Pepsi

A 1940s Pepsi ad aimed at African Americans, a target ignored by Coca-Cola at the time. The Economics Detective

Pepsi was created in 1893, and for decades, it was a niche drink with a tiny market. It went unnoticed by Coca-Cola, and stood no chance of challenging the soft drink giant. In the 1920s, Charles Guth, president of candy manufacturer Loft Inc., asked Coca-Cola for a discount on its syrup, which was used in the soda fountains of some of his retail stores. Coca-Cola refused, so when Pepsi entered bankruptcy in 1923, Guth bought it for $10,500 (equivalent to about $190,000 in 2023), and had chemists rework its formula to come as close to Coke as possible. Over the following decade, Pepsi-Cola was offered to the Coca-Cola Company for purchase on various occasions, but the soda giant declined the offer each time. It was a loser decision that Coca-Cola came to regret.

Charles Guth turned Pepsi around within two years, and made it a profitable enterprise. By 1936, Pepsi was the second largest soda company, behind only Coca-Cola, with sales of half a billion bottles a year. It was right around then that Loft Inc. sued Guth for breach of fiduciary duty, and took Pepsi from him in 1939. Loft focused on Pepsi, and spun off its non-soda businesses in 1941. The brand continued to grow, and eventually merged with Frito Lay in 1965, to become PepsiCo. That new company went on to finally eclipse Coke in sales in the 1980s, and in 2005, PepsiCo surpassed the Coca-Cola Company in market value.

Written by

Khalid Elhassan

A lifelong history buff, I developed a particular passion for WW2 history as a child, when I spent hours listening to my grandfather, enraptured, as he recounted his wartime experiences in the British East African Campaign and with the British 8th Army in North Africa.

I graduated with a history BA from George Mason University, then went on to get a JD from the University of Virginia School of Law. After lawyering for a decade, I moved to sunny Rio de Janeiro and a less demanding career, opening a tourism agency in Copacabana.

A big chunk of my free time is spent blogging (you can follow me on Quora https://www.quora.com/profile/Khalid-Elhassan ) or freelance writing, mostly about my favorite subject, history.