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And so--gulp!--has Venezuela. For the past 50 years, Pepsi had been the choice of generations of Venezuelans, holding a 40% market share; the country of 21 million was one of Pepsi's Top 10 global markets. The relationship was cushioned by the friendship between PepsiCo boss Enrico and Oswaldo Cisneros, CEO of Embotelladras Hit de Venezuela, the Pepsi bottler there. But Cisneros became a Coke convert for a reported price of $300 million, a whopping chunk of cash for half interest in the business. The swiftness of the deal left Pepsi's regional president, Alberto Uribe, sputtering with rage: "Oswaldo Cisneros was my friend. He sent me four lawyers and a judge to tell me this was over." Cisneros cited Pepsi's lack of commitment to the business and his own bad health as reasons for the switch. "I gave those men five years to take a decision. Five years!" he says. Pepsi called Cisneros' reasoning "laughable," noting that the company had been negotiating a deal with him for two years.
Pepsi and Coke have sold their products overseas for decades; or rather, they have sold concentrate to an unruly menagerie of bottlers in nearly 200 countries. In the past decade the two have spent billions to gain more control over the trademarks by letting licenses lapse, setting up partnerships or muscling undesirable bottlers out of the way. Pepsi, for instance, now has a 40% interest in its bottlers. Earlier this summer Coke arranged to buy out its British partner, Cadbury Schweppes; the two were the beverage version of Charles and Di. Coke's new partner is Coca-Cola Enterprises, the world's biggest bottler--44% owned by Coke. In this same manner Coke has reclaimed operations in the Benelux countries and France and set up "anchor bottlers" such as Coca-Cola Amatil in Vienna, which handles Central Europe. Pepsi General Bottlers of Chicago supply Poland as well as Pennsylvania.
Pepsi is also lagging in the critical category of profit. Coke pockets 30' for every dollar's worth of product it sells outside the U.S. Pepsi earns less than 7', a figure it hasn't been able to improve. This difference is enormous when you consider the sums of money these two companies have been investing across the planet. Coke for instance, is doubling its investment in Russia to $500 million next year. In China it has plunked down another $500 million. This year the company will invest some $1.5 billion worldwide. "You cannot jump-start things in this business. You have to build that infrastructure one step at time," says Goizueta.
Remarkably, PepsiCo ably demonstrates how much gold there is in being the eternal silver-medal winner. The company is still a veritable junk-food juggernaut that includes Frito-Lay, which dominates the salty-snack industry the way you-know-who does soft drinks. There are also the fast-food restaurants Taco Bell, Pizza Hut and KFC, a division that is on the rebound. The entire company brought in revenues of $30 billion and profits of $1.99 billion in 1995. The stock, which recently split, increased some 70% last year.