PepsiCo has faced significant challenges in recent years, culminating in a major setback as KFC announced it would replace PepsiCo’s soft drinks with Coca-Cola products at its 3,700 U.S. restaurants starting in January. This decision marks the end of a 40-year partnership that began when PepsiCo acquired KFC, though the company spun off the fast-food chain in 1997.
Despite its cultural prominence in the 1980s and ’90s through campaigns like the Pepsi Challenge and high-profile endorsements, Pepsi-Cola’s market share has dwindled. Last year, it held only 8.1% of the U.S. carbonated soft drinks market by volume, trailing far behind Coca-Cola’s 18.5%. Dr. Pepper now ranks as the second most popular drink, pushing Pepsi to third place.
Coca-Cola’s strategy focused on brand building and innovation, while PepsiCo diversified into a sprawling portfolio where soda was just one priority among many. As a result, PepsiCo generates more than twice as much revenue as Coca-Cola, yet its market valuation is only about half as big.
Fortune’s Phil Wahba explores how PepsiCo lost its competitive edge in the cola wars, highlighting the company’s struggles to maintain its position in the market.