From a Pharmacy Soda Fountain to the World's Second Biggest Cola: The Relentless Story of Pepsi

It has gone bankrupt. It has been bought and sold. It has been dismissed, underestimated, and nearly buried more than once. Coca-Cola was offered the chance to purchase it three separate times — and declined on all three occasions.

And yet, Pepsi not only survived. It became one of the most recognised, most studied, and most boldly marketed brands in the history of consumer goods.

This is the story of how a small-town pharmacist's curiosity became a global empire — and how every time the world counted Pepsi out, the brand found a way to come back swinging.

A Pharmacist, a Soda Fountain, and a Drink Called Brad's

In 1893, in the small town of New Bern, North Carolina, a pharmacist named Caleb Davis Bradham was experimenting behind the soda fountain at his drug store.

Bradham had trained at the University of North Carolina at Chapel Hill and had briefly attended the University of Maryland School of Medicine before family financial troubles cut his medical ambitions short. He returned to North Carolina, opened the Bradham Drug Company, and — like many pharmacists of the era — installed a soda fountain where locals could gather and refresh.

Behind that fountain, Bradham began mixing. His creation — a blend of sugar, water, caramel, lemon oil, kola nuts, nutmeg, and other natural additives — quickly became a favourite with his customers. They called it "Brad's Drink." It was an instant sensation at the pharmacy counter, reputed to be not just delicious but digestively beneficial.

On August 28, 1898, Bradham renamed the drink "Pepsi-Cola" — drawing from the word dyspepsia, meaning indigestion, as the drink was believed to aid digestion, and cola for the kola nut extract in the formula. Despite what the name implies, pepsin was never actually an ingredient in Pepsi-Cola.

From Soda Fountain to National Brand

The demand for Pepsi-Cola grew fast. In 1902, Bradham incorporated the Pepsi-Cola Company in North Carolina. On June 16, 1903, "Pepsi-Cola" became an official trademark. In the first year of operation, Bradham sold 7,968 gallons of syrup. By 1904, that number had grown to nearly 20,000 gallons.

In 1905, the first Pepsi-Cola bottling franchises were awarded in Charlotte and Durham. By 1910, there were 250 franchises operating across 24 states, and New Bern hosted the first-ever Pepsi-Cola Bottlers Convention. A drink invented behind a pharmacy counter had, in less than two decades, become a national business.

Then the war came.

The Sugar Crisis That Brought It All Down

When the United States entered World War I, sugar was rationed and prices soared dramatically — from roughly 3 cents per pound to 28 cents per pound. Bradham tried substitutes like molasses, but nothing matched the original formula's taste.

After the war, banking on a continued boom, Bradham purchased a large supply of sugar at the inflated wartime price. When sugar prices subsequently crashed, the losses were irrecoverable. On May 31, 1923, Bradham and the Pepsi-Cola Company declared bankruptcy. Assets were sold for $30,000.

Caleb Bradham died on February 19, 1934 — just as the brand he had built was beginning its unlikely comeback. He never saw what Pepsi would become.

Charles Guth and the Bottle That Saved the Brand

The brand passed through different hands before landing with Charles Guth, the president of Loft, Inc., a candy company. Guth acquired Pepsi in 1931 — notably, Coca-Cola was offered the opportunity to buy the Pepsi-Cola Company on three separate occasions between 1922 and 1933, and declined each time.

Guth had Loft's chemists reformulate the syrup. And then he made a single decision that would redefine Pepsi's fortunes entirely.

In 1934, in the depths of the Great Depression, Guth began selling Pepsi in 12-ounce bottles — double the standard 6.5-ounce serving that both Pepsi and Coca-Cola had been offering — at the exact same price: five cents. Twice the drink, for the same nickel.

The 12-ounce bottle debuted in Baltimore, where it was an instant success. For Depression-worn Americans watching every penny, the value proposition was irresistible. Pepsi-Cola's profits doubled from 1936 to 1938.

The Jingle That Made Advertising History

The 12-ounce bottle needed a voice. In 1940, Pepsi made history with a radio campaign that had never been attempted on this scale before.

"Nickel, Nickel" — first recorded by the jazz trio the Tune Twisters — became the first advertising jingle ever broadcast nationwide on radio in the United States. The jingle was arranged to loop endlessly: "Pepsi-Cola hits the spot / Twelve full ounces, that's a lot / Twice as much for a nickel, too / Pepsi-Cola is the drink for you."

It was impossible to get out of your head. And in 1941, Pepsi's stock was traded on the New York Stock Exchange for the first time.

The 1940s: A Marketing Breakthrough Ahead of Its Time

Under president Walter Mack in the 1940s, Pepsi did something that no major American consumer brand had done before: it deliberately and respectfully targeted the African American community as a primary audience.

Up until this point, the full revenue potential of Black consumers was largely ignored by white-owned manufacturers — or worse, their advertising used demeaning stereotypes. Mack recognised this as both a moral failure and a missed business opportunity.

He hired Edward F. Boyd to lead a dedicated twelve-man all-Black sales team. The team worked seven days a week, visiting churches, schools, college campuses, YMCAs, community centres, insurance conventions, and civic organisations. They secured endorsements from prominent musicians including Duke Ellington and Lionel Hampton. Crucially, Pepsi's advertising portrayed Black customers as self-confident, middle-class citizens — the polar opposite of the stereotypes common in mainstream media of the era.

The result was profound. After the sales team visited Chicago, Pepsi's share in the city overtook Coca-Cola's for the first time. African American soft drink consumers became three times more likely to purchase Pepsi over Coke.

It was one of the most progressive and effective inclusive marketing campaigns in American business history.

The Pepsi Generation and the Birth of Youth Marketing

In 1961, the brand officially shortened its name from "Pepsi-Cola" to simply "Pepsi." In 1963, it launched one of the most influential positioning strategies in advertising: the "Pepsi Generation" campaign, crafted to target younger consumers directly — portraying Pepsi as the vibrant, energetic choice of a new era.

Where Coca-Cola was the established institution, Pepsi positioned itself as the drink of the young, the restless, and the forward-looking. The strategy separated the two brands not just by taste but by identity.

In 1964, Pepsi launched Diet Pepsi — the first nationally distributed diet cola in the United States.

On June 8, 1965, the Pepsi-Cola Company merged with Frito-Lay, Inc. to become PepsiCo, Inc. — a move that gave the brand both financial stability and a diversified portfolio that would carry it into a new era of global competition.

The Pepsi Challenge: The Boldest Move in the Cola Wars

By 1975, Pepsi had rebuilt. But Coca-Cola still dominated the market. Pepsi's response was audacious, direct, and unforgettable.

The Pepsi Challenge launched in Dallas, Texas. In malls, supermarkets, and theatres across America, Pepsi set up booths where shoppers were invited to take a blind taste test between two unmarked cups — one Pepsi, one Coca-Cola. The results, filmed and aired as television advertisements, consistently showed participants choosing Pepsi.

It was marketing as provocation. Rather than claiming superiority, Pepsi handed the evidence directly to consumers and let their choices speak. The campaign ran from 1975 through 1984, during which time Pepsi's US market share rose from 23.3% to 31.7%, while Coca-Cola's declined. The Pepsi Challenge so rattled Coca-Cola that the company famously reformulated its flagship product in 1985 — a decision that became one of the most studied marketing missteps in history.

In 1984, Pepsi replaced the Challenge with "The Choice of A New Generation" — a campaign that famously featured Michael Jackson, cementing Pepsi's identity as the brand of youth and pop culture.

The Marketing Strategy That Defined a Challenger Brand

Looking across Pepsi's entire history, a single strategic thread runs through every era: Pepsi has always known it is the challenger, and it has always leaned into that identity rather than fighting it.

From the 12-ounce bottle that gave Depression-era consumers twice the value for the same price, to the first nationwide radio jingle, to the groundbreaking inclusive marketing of the 1940s, to the Pepsi Generation's youth targeting, to the Pepsi Challenge's direct brand confrontation — each campaign was built on the insight that the underdog has to be bolder, smarter, and more willing to take risks than the market leader.

Pepsi never tried to out-tradition Coca-Cola. It out-innovated it, out-targeted it, and out-provoked it — decade after decade.

Still Standing. Still Challenging.

In 2023, Pepsi was ranked the second most valuable soft drink brand in the world. PepsiCo, its parent company, has revenues approximately double those of The Coca-Cola Company — a difference powered largely by the Frito-Lay snack portfolio.

From a pharmacist's soda fountain in New Bern, North Carolina, to over 200 countries worldwide — the brand that went bankrupt in 1923 is, a century later, one of the most enduring commercial stories ever told.

Pepsi didn't survive by being cautious. It survived by being relentlessly itself: the younger, louder, bolder choice — and always, defiantly, twice as much for a nickel.