A Brief History of Pepsi-Cola

One of Americas favorite soft drinks, Pepsi-Cola, didn't make it to the Taste test stage ... several times.  The ability of the product to survive several bankruptcies, numerous management changes, and major internal squabbles made it an even stronger player in the bid for consumer taste acceptance.

Our story begins with the birth of Caleb D. Bradham in in 1867.  Bradham was born in Chinquapin, North Carolina in 1867.  Chinquapin is a rural community about forty miles south of New Bern, North Carolina. New Bern is a seaport town which was first settled in 1710 by Swiss and German emigrants.

Caleb Bradham attended the University of North Carolina and the University of Maryland Medical School.  While at the University of Maryland, he worked part-time in a local drug store.  When his fathers' business failed in 1891, Caleb dropped out of medical school and decided to open a drug store of his own in New Bern.  This drug store was the first home of Pepsi-Cola, and it was located at Middle and Pollock Streets in New Bern.

Caleb formulated the Taste that Beats the Others cold in his new drug store, and in 1893, he began selling "Brad's Drink", which among other claims, was to be a cure for dyspepsia.

In 1898, Caleb Bradham bought the name "Pep Cola" for $100 from a company in Newark, New Jersey that had gone broke. He then changed the name of his new drink from "Brad's Cola to Pepsi-cola, and persuaded a neighbor who was an artist to create the first Pepsi-Cola logo.

Bradham applied to the state of North Carolina and to the U.S. Patent Office for a trademark on the name Pepsi-cola in 1902.  He also issued ninety-seven shares of stock for his new company, and was ready to supply Pepsi to an eagerly awaiting world.

From the back room of his pharmacy, Caleb mixed and sold over 8,000 gallons of syrup his first year.  Having an appreciation and understanding of the value of advertising, he invested $1,900 of his early profits in promotion of his new drink.

By 1903, Bradham had outgrown the back room of his drug store, and moved his young company to temporary rented quarters for almost a year before finally settling into its permanent home, known as Bishops factory, in New Bern.  At that time, he also added bottling lines to his growing syrup manufacturing business.

Caleb had established fifteen additional bottling plants by 1906 to attract the early Pepsi Generations'.  The locations of these plants are of great significance to collectors of early Pepsi memorabilia, and they are listed below:

PEPSI-COLA BOTTLING PLANTS IN 1906:
Wilson, NC Charlotte, NC Fayetteville, NC Wilmington, NC Washington, NC
Tarboro, NC Kinston, NC Greensboro, NC Raleigh, NC New Bern, NC
Darlington, NC Norfolk, NC Suffolk, VA Huntington, WV Renserverte, WV

By 1907, forty bottling plants were producing Pepsi-Cola, and 100,000 gallons of syrup were sold that year. In 1908, new offices and plant facilities were added to the New Bern plant, and the number of bottlers increased dramatically to ninety-three.

The beginning of the second decade of the new century found Caleb Bradham producing syrup for 280 bottlers, and it seemed as though nothing could stop the growing popularity of this new soft drink.

Caleb's major problems began shortly after the end of World War I, when sugar prices began a series of wild fluctuations.  Sugar, a principal ingredient in the syrup base of Pepsi, rose from five cents a pound to twenty-two cents a pound. Believing it would rise even higher, Bradham bought large amounts as a hedge against increased price levels.  By 1920, sugar prices had dropped to a low of three cents a pound, and the end of the first chapter of Pepsi's history was just a matter of time.

By 1922, the Pepsi-Cola Company was insolvent.  Finally, on March 2, 1923, bankruptcy was declared, and Caleb Bradham returned to his pharmacy ... and faded into obscurity.

On May 7, 1923, the Craven Holding Corporation, a group of Bradham's creditors, bought the Pepsi-Cola trademark and assets at auction for $30,000.  The group purchased Pepsi-Cola as a holding action until a buyer could be found to actually put the business back into operation.  That buyer turned out to be a Wall Street broker named Roy C. Megargel, who paid $35,000 to the Craven Holding Corporation.

Roy Megargel formed the Pepsi-Cola Company in the state of Virginia in 1923, and moved the syrup manufacturing facilities to 1224 West Broad Street in Richmond, Virginia. A string of unprofitable years caused Megargel to sink much of his own money into his venture, Finally, in a last attempt at making Pepsi "Come Alive" and to increase operating capital, he reorganized as the National Pepsi Cola Company in the state of Virginia.

The Great Depression of 1929 became the last straw in Megargel's attempt to revive his company, and on June 8, 1931, the Pepsi-Cola Company again suffered the agony of bankruptcy.

By 1931, the "Cola Wars" had already begun, and Charles G. Guth, an executive from the Loft Candy Company, had become a victim when the Coca-Cola Company refused to give him a jobber's discount on syrup served at over 138 candy stores in the greater New York area. Guth's response to this snub was to purchase the sole rights to the trademark and the assets of the defunct Pepsi-Cola Company for $10,500.

On August 10, 1931, Charles Guth formed the Pepsi-Cola Company in the state of Delaware. The syrup concentrate facility was moved to the Loft Candy company laboratories in Long Island City, New York, and the final mixing and shipping of the product was handled by Guth's own company, the Grace Company of Baltimore, Maryland.

During the early reorganization of the company, Guth had a Loft Company chemist change the syrup formula of Pepsi to one "more to his liking", and he negotiated a contract with the Mavis Bottling Company of Long Island City to bottle Pepsi in a six ounce bottle. An early advertisement by the Loft Candy Company in 1932 claimed that 3,500,000 drinks of Pepsi Cola were served at its soda fountains in its 138 candy stores. However, sales in its six ounce bottles were flat and going nowhere.

In a desperation move to increase sales in bottles, Guth decided to introduce a 12 ounce bottle of Pepsi Cola with a neck wrapped in tin foil. He wrongly concluded that the public would accept this "bigger drink" at a "bigger price", which was double the volume of the then-popular five cent , six ounce drink.

Disheartened by his lack of success in promoting Pepsi-Cola, Guth approached his old enemy, the Coca-Cola Company of Atlanta, with an offer to sell. Coca-Cola declined to even offer a bid. With no potential buyers, Guth went back to his customers with the newly-created 12 ounce bottle, but only charged the standard five cent price, and soda drinkers found the first good reason to make a massive shift to Pepsi. A contract for the new 12 ounce bottle was given to Joseph LaPides of Baltimore, Maryland in 1933. With sales booming, Guth decided to purchase the Mavis Bottling Company and set up his own bottling operation. In 1935, the Pepsi-Cola Company was moved to the Mavis Bottling location at 47-51 33rd Street, Long Island City, New York.

By 1936, the new 12 ounce Pepsi bottle had created a two-million dollar operating profit for Guth and his revitalized company. A prospectus issued by the company in 1936 outlining some of its accomplishments shows just how far Charles Guth had advanced the "Pepsi Generation."

Pepsi being bottled in all 48 states, Cuba, Canada, and England.
Five-hundred-million bottles of Pepsi were consumed in 1936.
One-billion bottles projected for consumption in 1937.
Forty-million pounds of sugar to be used in 1937.
Pepsi now manufacturing all its crowns and cases. More than one million Pepsi cases to be made in 1937.
Pepsi has become second largest soda beverage company in World.
Stock not listed for exchange, and none is for sale.
In 1938, profits from the Pepsi-Cola Company had soared to an astounding 4.2 million dollars. It seemed as though success and prosperity were too much for Guth, who became deeply embroiled in a nasty labor dispute at the Loft Candy Company. After an involved legal battle, he was ousted as leader of the Pepsi-Cola Company.

It became the job of the new president, Walter Mack, to restructure and revitalize the troubled Pepsi-Cola Company. Walter's flair for and belief in a strong advertising campaign brought an early success in his leadership roll when, on October 4, 1939, he introduced a cartoon comic strip called "Pepsi and Pete... the Pepsi-Cola Cops". The strip had a widely syndicated eleven year run, and brought much sought-after recognition to Pepsi-Cola.

Another of Walter Mack's major accomplishments was the standardization of the 12 ounce bottle for the then-existing 341 franchised bottlers. The new bottle had the name Pepsi-Cola embossed in angled columns around the neck, and a paper label was applied to the neck and middle portion of the bottle. This bottle first began to appear around 1940, and was used until the switch to applied color label bottles was made in early 1947.

  Walter S Mack, His "twice as much for a nickel" launched the Pepsi rocket

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In 1941, the Pepsi-Cola Company went public, and for the first time in its history, was listed on the New York Stock Exchange. Another move was made by the company in 1948 to 3-West 57th Street, New York City, New York.

World War II focused its battles in Europe and Asia during the early 1940's , and the "Cola Wars" were being fought equally as hard to win the loyalty of the American public. Coca-Cola , without question, won the "Cola Wars" during this decade by catering on a world-wide basis to the American soldiers.

When World War II was finally over, and the soldiers returned home, the Pepsi catch phrase had changed from "Join the Pepsi People" to "The Pause That Refreshes', and by 1949, profits of the Pepsi-Cola Company had dropped to $2.1 million.

Other factors besides the shift of loyalty of the public were responsible for loss in Pepsi's profits. Sugar price fluctuations, lack of positive movement toward the newly emerging vending machine market, and an untimely switch to an 8 ounce bottle all contributed to produce the drop in business.

In 1950 a management change brought Alfred N. Steele, a dynamic and bold leader, to the position of president of the Pepsi-Cola Company. With the able assistance of Herbert Barnet, Steele managed to dramatically alter the attitude of Pepsi's from line of sales, its franchised bottlers, and profits again headed in the upward direction.

During Al Steele's reign, two changes significant to collectors of Pepsi memorabilia were made. In 1951, a logo change from two dots, or a semi-colon, between the words "Pepsi" and "Cola" (double dot), to one dot, or a period (single dot), was made. These different logos are not only used as a dating means for Pepsi items, but they also serve as specific divisions in categories for many collectors. Another change made at this time was a switch to a swirl-designed bottle.

By 1959, under Al Steele's watchful eye, sales went up over 200%, and profits were up over $700. The rapid and healthy growth of the company ushered it into its new headquarters at 500 Park Avenue, New York City, New York in 1959.

Pepsi "Jingles", those short word combos that made everyone aware of the existence of Pepsi-Cola, were used in the early 1900's, but became a key part of over-all advertising under Steele. The jingles also serve as important tools for dating Pepsi collectibles.

PEPSI-COLA JINGLES
1909 - 1939 "DELICIOUS & HEALTHFUL"
1939 - 1950 "TWICE AS MUCH FOR A NICKEL"
1953 - 1958 "THE LIGHT REFRESHMENT"
1958 - 1961 "BE SOCIABLE. HAVE A PEPSI"
1961 - 1963 "NOW IT'S PEPSI FOR THOSE WHO THINK YOUNG"
1963 - 1967 "TASTE THAT BEATS THE OTHERS COLD. PEPSI POURS IT ON"
1969 - 1973 "YOU'VE GOT A LOT TO LIVE. PEPSI'S GOT A LOT TO GIVE"
1973 - 1975 "JOIN THE PEPSI PEOPLE. FEELIN' FREE"
1976 - 1978 "HAVE A PEPSI DAY"
1979 - 1981 "CATCH THAT PEPSI SPIRIT!"
1981 - 1982 "PEPSI'S GOT YOUR TASTE FOR LIFE!"
1983 - 1984 "PEPSI NOW! TAKE THE CHALLENGE!"
1984 - 1991 "THE CHOICE OF A NEW GENERATION"
1992- "GOTTA HAVE IT"
A well-managed, profitable Pepsi-Cola was turned over in 1963 to Donald Kendall , who took over as president. Kendall had risen through company ranks from a syrup salesman in 1947 to International Sales, where he established the product in Russia in the 1950's. Kendall's grasp of all phases of the company's operations gave him the unique ability to implement a wide range of diversification for the company during his stay as CEO.
A few dates of significance to collectors during the early days of Donald Kendall are as follows:
1963 Pepsi introduces Patio Diet Cola
1964 Patio Diet replaced by the first Diet Pepsi-Cola
1964 The Tip Corporation of America, producers of "Mountain Dew" was purchased by Pepsi.

EARLY PEPSI-COLA BOTTLES

The early Pepsi bottles with specific cities and states on the label fall into three broad categories.

The first group is defined as the "Double Dot", Red/White/Blue label bottles. Included are the first painted label bottles produced in the early forties by Pepsi. This group of bottles is in much demand by collectors, and generally command a $12.00 to $25.00 price range if in a high grade condition.

Group two is described as the "Double Dot", Red/White label bottles. They were distributed from the mid 1940's to about 1950. The price range is from $8.00 to $12.00.

The third group is the "Single Dot", Red/White label bottles which were filled between 1951 and the late 1950's. The value of this group is $5.00 to $8.00 to brand or cities collectors, but have little value to general collectors because of the large quantities produced.

Two other unique generations of the above mentioned groups exist, referred to as the "2 FULL GLASSES"(2FG), and the "FOUNTAIN SYRUP" (FS) bottles. The (2FG) bottles exist in all three groups of cities bottles, and are valued at about $15.00 more than the regular bottles. The (FS) bottles are very rare and command an $8.00 premium. They have been reported only in the last two groupings.

CLICK HERE to see over 400 Pepsi Cola ads in our Ad Art Gallery
SOURCES OF INFORMATION:
1. "Pepsi-Cola Company, A Domestic Historical Outline", James Johnson, Chicago, IL, 1984
2. "The Other Guy Blinked, How Pepsi Won the Cola Wars", Roger Enrico, Jesse Kornbluth, Bantam Books, 1986
3. "Pepsi-Cola Collectors Club Newsletters", Bob Stoddard, Editor, Covina, CA, 1984 to 1988

 

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