This blog post was composed by graduate assistant Bailey Edling, a master’s student in the History Department.
A war came to a head in the 1970s and 1980s. The two opposing sides fought endlessly to prove they were superior. They produced targeted propaganda and made internal changes to ensure their appeal to a broader population. Though it could have been called a cold war, it was not fought between the United States and the Soviet Union. Instead, it was between two American institutions, Coca-Cola and Pepsi-Co.
Soda corporations, like Coca-Cola, are not what they appear to be. They are not one large company producing and selling a sweet drink found in every grocery store, gas station, and bodega in America. They are, in fact, a franchise. Coke and Pepsi are not selling their crisp cans of sodas or classic refreshing glass bottles; they are selling syrup. The sale of this syrup in the latter half of the twentieth century became infinitely more interesting for two reasons. First, the industry battle between Coke and Pepsi produced iconic print ads, commercials, and slogans. Second, the way they sold their syrup looked, to many American legislators, like a violation of antitrust laws. Representative Sam Hall sat on the House Judiciary Committee and sponsored a bill that some accused of supporting the soda industry’s confusing monopoly.
The Cola Wars between Coke and Pepsi began in the 1960s when Coca-Cola had a firm grasp on American consumers. Pepsi responded with their strangely influential taste test, illustrating that when given a blind choice, people preferred the sweetness of Pepsi. To meet consumer demands, Coke changed its formula, adding more sugar and changing the name to “New Coke.” To the delight of Pepsi-Co, Coke consumers were not impressed with the change. They were frustrated that their soda no longer tasted the same, even if they had not preferred the original taste of it. Coca-Cola pivoted once more, bringing back their original formula as the promotional “Coca-Cola Classic,” and rebranding “New Coke” as “Coca-Cola,” then “Coke II,” eventually phasing it out altogether.[1] Meanwhile, Pepsi-Co focused on its ad campaigns, partnering with celebrities like Pele and Michael Jordan. Coca-Cola returned with its iconic “I’d Like to Buy the World a Coke” video.[2] Both companies produced jingles, slogans, Norman Rockwell-esque ads, and even clothing. In the middle of this entertaining battle, another foe emerged: American legislators.
In the 1970s, a question emerged about the soda franchise system – was it legal? When a bottling manufacturer bought the franchise rights to a soda syrup, they also purchased a territory where they could exclusively sell it. In other words, “a bottler of Coke enjoys sole distribution rights within a market…” so that another manufacturer or warehouse “cannot distribute Coke in that geography.”[3] However, that also means the Coke manufacturer cannot bottle another cola, such as Pepsi. Over time, this franchise territory system made Coke, Pepsi, 7Up, and Dr Pepper more readily available in any small-town grocery store. Yet smaller, cheaper, regional sodas like Shasta, Mr. Pibb, and a Texas favorite, Big Red, could not get the same hold on the market as the larger corporations.
Legislators on both sides of the aisle were torn on this issue. On the one hand, the franchise system worked well, had created a large industry and vast wealth, but on the other, it was stifling small businesses. Their constituents were also torn. One Fort Worth bottler wrote his representative, stating, “The franchise system…has been a detriment to the industry…thousands of small businessmen have been driven out of the industry because of it.”[4] He noted that the franchise system will inevitably lead to “the industry being dominated at all levels by parent companies.”[5] Other legislators came out strongly on the side of the soda companies; among them was Texas Representative Sam Hall, who wrote the Interbrand Competition Act to protect the franchise system. The bill was unique. Essentially it acted as a law that, as one Congressman put it, allowed “permanent exemption from federal antitrust laws….”[6] Legislators supporting the bill argued that competition existed between large soda corporations and local ones in any small town in America. One might find a Pepsi-Cola or its regional equivalent, Hosmer Mountain, in any gas station aisle. Legislators asserted that this competition was significant enough to dispute any monopoly claims. The bill underwent several modifications between the House of Representatives, where it was sponsored by Hall, as it moved into the Senate, where it eventually passed and became law. This law is still in effect today, and soda corporations operate under the same franchise system. Complex and unique, the soda franchise system has functioned for over a century under the radar of American consumers.
The latter half of the twentieth century was a stressful time in America; the U.S. was engaged in actual warfare abroad. At home, there raged another war, one that genuinely impacted American industry, economy, and consumers. The Interbrand Competition Act and Cola Wars deeply affected the soda industry in America and, as one constituent put it, thousands of small businesses. So, while you might like to buy the world a Shasta, depending on the territory you live in, you may have to buy them a Coke.
[1] Becky Little, “How the ‘Blood Feud’ Between Coke and Pepsi Escalated During the 1980s Cola Wars,” History.Com, March 12, 2020, https://www.history.com/news/cola-wars-pepsi-new-coke-failure.
[2] “Coca-Cola, 1971 – ‘Hilltop’ ‘I’d like to buy the world a Coke.’” Youtube Video, 0:59, posted by “Project ReBrief,” March 6, 2012. https://www.youtube.com/watch?v=1VM2eLhvsSM
[3] Russ Klein, “Soft Drink Distribution Is Fascinating,” Marketing Today, n.d., https://medium.com/marketing-today/soft-drink-distribution-is-fascinating-8aecdcb016fc.
[4] Cliff Barnhart to Henry B. Gonzalez, “Constituent Letter,” May 1, 1980, Sam B. Hall Papers, Box 36, File 2, W. R. Poage Legislative Library, Baylor University.
[5] Ibid.
[6] Fortney H. Stark Jr., “Dear Colleague Letter,” June 23, 1980, Sam B. Hall papers, Box 36, File 1, W. R. Poage Legislative Library, Baylor University.
[7] Kim, Susanna. “Pepsi Challenge Returns With a Bubbly Twist.” ABC News, March 11, 2015. https://abcnews.go.com/Business/pepsi-challenge-returns-bubbly-twist/story?id=29552172.
[8] Photo of Rep. Sam Hall. n.d. Photograph. Sam B. Hall papers, Box 522, File 6. W. R. Poage Legislative Library.
[9] Renesi, Marianna. “Coca-Cola, 1971 — ‘I’d like to Buy the World a Coke.'” AD DISCOVERY — CREATIVITY Stories by ADandPRLAB (blog), n.d. https://medium.com/ad-discovery-and-creativity-lab/coca-cola-1971-id-like-to-buy-the-world-a-coke-d570ddb85477.
Bailey, you have done it again! Excellent blog post about something so many of us lived through but didn’t know of the legislative history and the involvement of Congressman Hall. Your research was top-notch!
I worked in a drug store as a senior in high school in 1975. We sold Coke syrup in the waxed paper milk carton type container as medicine .
About half the size of a normal half gallon container of milk.
I tell people this and they don’t believe me.
Have you seen this in your research ?