Too Big To Fail: How Coca-Cola Uses $28B For The Good Of The Consumer

This blog, including photos and reference links, is available on my Medium, but the writing itself is available here for easy viewing.

“Do you have Diet Coke here?”

If you’ve ever been to an American restaurant, you might have found yourself asking for a Diet Coke only to find out that they only have Diet Pepsi, or vice versa. The reason behind that is simple, and it’s all business.

Coca-Cola and Pepsi are both brands that have been around since the 1800s, 1886 and 1896, respectively. For both companies to predate and exist past historical movements like women earning the right to vote and the 2008 recession, they’ve had to make some strategic business decisions. Two major strategic contributors to their success are acquisition and exclusivity deals.

It’s important to know that almost every drink you can find in the refrigerated section at your local gas station is owned by Coca-Cola or PepsiCo. Want some peace tea? That’s Coca-Cola. Dunkin Donuts iced coffee? Also Coca-Cola. Even your alkaline Smartwater is owned by Coca-Cola. And if it’s not a Coca-Cola brand, it’s probably PepsiCo.

These two brands constantly purchase smaller drink companies as they gain popularity and add it to their drink portfolio. A great recent example of this is PepsiCo’s recent acquisition of the functional beverage brand Poppi that’s been taking over grocery stores alongside their competitor Olipop in recent years.

During SXSW 2024, I was lucky to attend the “Building Brands in the Unhappiness Era” panel featuring top leaders at Olipop, DailyPay, Spanx, and Squint Consulting. You can stream it for yourself if you’re interested, but for those short on time, I’ll share just one interesting concept from Ben Goodwin, Olipop’s co-founder and CEO, that still sticks with me over a year later. According to him, this pro-health soda brand was built on the fundamental idea that soda has a deep-rooted structure in American culture and is a major part of people’s identities. Americans will always drink soda, and they want to try and make it better for you.

Whether or not you’ve heard of Poppi or Olipop, PepsiCo has. In order to get an edge on Coca-Cola, which doesn’t own one of these brands, they bought the prebiotic soda brand Poppi for the price of $1.95 billion in March of 2025. In return, Poppi gets to place its product in front of a much larger customer base due to a series of exclusive brand deals owned by parent company Pepsi-Co and their vast commercial capabilities.

It might cost you a couple of dollars per can if you buy one at a time, but all of these drinks are worth a lot more than that to these companies. Putting every consumer purchase and brand deal worldwide together leads to PepsiCo generating $91.8 billion in overall revenue in 2024.

But that’s can’t all be from grocery store purchases, so what are these brand deals I’m talking about? Well, if you’ve ever been to an American restaurant or fast food chain before, you might notice you don’t always have a choice.

Typically, most major restaurants have some sort of exclusivity deal in place with either Coca-Cola or PepsiCo. That means if you go to KFC, you can only buy Pepsi products. If you go to McDonald’s, you can get a Coke Zero and other soda brands Coca-Cola as an entity owns.

These exclusive contracts are called Pourage Rights, and they’re typically multi-year agreements to only sell one of these company's products in a deal that’s a win-win situation for both companies. The restaurants get cheaper wholesale prices on the beverages they have to sell and brand consistency across different locations. Coca-Cola and Pepsi-Co get indirect advertising by controlling consumers' drink choices, priming them for future direct purchases in stores, and physical advertising with signage and promotions featuring their drinks.

These strategic acquisition moves and exclusivity deals are two of the biggest reasons why both companies have held their status for over a 100 years. But… what happens when you own basically every nationally sold drink on the market? What do you do when you make $91.8 billion in revenue in one year, or $47.1 billion in the case of Coca-Cola? And if you’re curious, this difference is mainly explained by the fact that Pepsi-Co also owns Frito-Lay, aka the maker of the most commonly found potato chip brands in America.

What do you do when you’re too big and too established to fail?

If you’re Coca-Cola, the answer is that you throw a giant festival with some of the biggest musicians in the country. And this actually makes a lot of sense. Now hear me out:

The Coca-Cola Sips & Sounds Festival is a small Austin-based music festival that hosts less than 7,000 guests but brings big entertainment with names like Halsey, Benson Boone, and The Chainsmokers at the top of their lineups. When tickets for the event cost less than $70 per day, and Coca-Cola has to pay for event fees, artist fees, staff, and security, you know the company had to take a loss hosting this.

There’s simply no way they made all of their money back the exact days of the festival, let alone made a profit.

So why’d they do it? It’s still about business.

In a 2024 media release detailing company objectives, Coca-Cola states “Our … approach to innovation includes exploring new ways to engage consumers through our marketing. We create authentic, culturally relevant experiences for our brands that revolve around consumer passions including music, gaming, food and sports. This means shifting our marketing investments towards digital, live and retail experiences, meeting our consumers where they are.”

With almost every deal already made and generations of market share secured, Coca-Cola had to find a new way to innovate and serve the consumer that isn’t a physical product. Now, it’s about providing an experience.

While newer brands have to rely on traditional marketing and advertising methods, Coca-Cola doesn’t need to do that as much as they need to be a step above these new and novel competitors like Olipop or Poppi who don’t have the capital they do to engage consumers.

“Innovation is anything new that creates value.”

“Innovation is anything new that creates value,” explains John Murphy, President and Chief Financial Officer of Coca-Cola. “When you take on that mindset, you can apply it into all aspects of the business. Staying ahead of the curve requires constant invention and reinvention...”

Engaging consumers through experiential marketing in a way other brands can’t afford to do and don’t do brings value in the long term even if they take a loss on the event itself.

“It’s important to think about how these types of events can serve as a platform for deriving a lot of different types of value, whether that’s hosting customers through customer entertainment, building the brand directly with consumers or creating content,” said Ryan Keen, senior marketing manager at Coca-Cola in an interview with Event Marketer. “So it’s not a one-off activation … but one that we look at as a platform to activate not just on-site, but in the lead-up to, and post-event, as well.”

As nice of an idea it is that Coca-Cola threw a big party so Austinites and travelers could have a good time, they’re still trying to sell you a product. Not just at the festival, but everywhere you go after.

Festivalgoers are described as customers and consumers, not guests, and the event itself is considered proprietary. By providing you with an affordable, exciting, and even family-friendly experience surrounded by Coca-Cola products and signage, they hope to entice brand loyalty within you to inspire future purchases of the drinks you bought there.

While the festival is still a sales funnel tactic and a major marketing tactic, and a very good one at that, it’s one with net consumer benefit which is something to admire. And while it is an innovative approach within their industry, this push towards live and digital activations through experiential marketing is still in line with the Coca-Cola brand image.

As a company, Coca-Cola tries to associate itself with happiness. Their former taglines include “Have a Coke and a Smile” and “Open Happiness”. In recent years in the digital age, they’ve used brand hashtags online like #MakeItHappy. It’s easy to know that an affordable festival with your favorite artist is going to make you feel happy, as are all the memories associated with Coca-Cola from that day.

“Experiences are sticky — they become memories much more easily than random information. So it makes sense that customer experiences and experiential marketing are so important to brands like Coca-Cola.” says Jennifer Clinehens in her overview of how Coca-Cola built the world’s most “memorable brand”.

A happy memory that leads to positive brand association and future sales is worth a lot to the brand’s overall business goals, and apparently they think it will lead to more revenue in the long term than the money they spent hosting the event. Whether or not that’s true will never be able to quantified, but regardless, I’d say this is a great use of $28 billion in gross profit from the company given its pro-social positive effects on the community. While experiential and even digital marketing are hard to connect to sales directly, the intangible value they provide to consumers and companies should never go unnoticed.