Once upon a time in the early 1930s — the darkest days of the Great Depression — a small, struggling beverage company named Pepsi-Cola was desperate to stay afloat. Originally founded in 1893 by pharmacist Caleb Bradham under the name “Brad’s Drink,” the brand had gone bankrupt once already by 1923 due to volatile sugar prices and poor financial management. It had changed hands a few times and was again facing financial ruin.
With sales floundering and creditors knocking at the door, Pepsi’s owners were willing to do something drastic: they approached The Coca-Cola Company — their much larger and more successful rival — and offered to sell the entire Pepsi-Cola brand, secret formula, and all of other assets for a mere $50,000.
Coca-Cola’s response?
“Not interested.”
Executives at Coke didn’t think Pepsi was worth that price — which, adjusting for inflation until today, was roughly the equivalent of $1 million. Still it would be a complete and total bargain by even modern standards, especially considering the billions both brands rake in annually now.
So, Pepsi filed for bankruptcy — again.
But then came Charles Guth, the president of a candy company who had a grudge against Coca-Cola for refusing to give him favorable syrup pricing. He bought Pepsi’s assets out of bankruptcy, reformulated the drink, and introduced a revolutionary idea: offering 12 ounces of soda for just 5 cents — the same price Coke was charging at the time for a mere 6 ounces.
That value proposition worked wonders during the cash-strapped era of The Great Depression, and Pepsi surged in popularity. Over the decades, Pepsi continued to innovate, eventually emerging as Coca-Cola’s most fiercest competitor. The so-called “Cola Wars” of the 1980s saw both brands battling for dominance through marketing stunts, celebrity endorsements, and national taste tests. By the 21st century, PepsiCo had grown into a global powerhouse not just in beverages, but in snacks and food as well, owning brands like Lay’s, Gatorade, and Quaker Oats.
Today, both Coca-Cola and PepsiCo are worth well over $200 billion each — and the $50,000 mistake has become one of the most legendary “missed opportunities” in American corporate history.
If there’s a take-away from this story, perhaps it is know your worth — and don’t underestimate someone else’s either. In business and in life, today’s underdog might just be tomorrow’s industry giant.
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If you enjoyed this small drink of business history, you might enjoy The Art of Money-Getting: The P.T. Barnum Code — a modern revival of Barnum’s timeless principles, reimagined for today’s entrepreneurs and hustlers. Written by local author Christopher M. Wathen, it’s available now on Amazon here: https://www.amazon.com/dp/B0FD8G5WCV.