Pepsi won by quitting

Pepsi spent a hundred years trying to beat Coca-Cola.

They failed. And by 2024, it was definitive: Pepsi became the fourth cola in America. Behind Sprite, which Coca-Cola owns, and behind Dr Pepper, which is owned by a coffee machine company.

I can't remember the last time I even considered buying a Pepsi. (To be fair, I don't drink Coke either, but as one viewer recently commented, “Can you stop reminding us you eat healthy? It makes me feel bad.”)

So: hundred-year war, lost.

But look at the other scoreboard: revenue.

In 2024, PepsiCo did about double Coca-Cola's revenue. $92 billion against $47 billion.

All because they quit the war, and found other games they could win at.

Back in 1965, they merged with Frito-Lay. Now they dominate the snack aisle.

Then in 2001, they bought Quaker Oats, which just so happens to own Gatorade — that’s 80% of the sports drink market.

Amazingly, Coca-Cola's board looked at the same deal and passed. Possibly the biggest mistake in that company's history. (And this is a company that once tried selling wine.)

By December 2005, the stock market valued PepsiCo above Coca-Cola for the first time in 112 years.

Their flagship cola was sliding the whole time. But it had stopped mattering.

Today, snacks are more than half of PepsiCo's business.

Meanwhile, the category they stopped fighting over is shrinking. Americans went from drinking 53 gallons of soda a year at the peak to about 41 today, and the Ozempic era is cutting into what's left.

It’s not quite deck chairs on the Titanic, but it’s not far off.

Yes, Coca-Cola still runs fatter margins. Syrup is a better business than chips.

But they’re all-in on a product America is quitting.

And that’s the takeaway here:

When your playbook stops working, don't run it harder: change the game you’re playing.

The longer you’ve been fighting, the harder it is to admit defeat. The dangerous part is letting that sunk cost color your judgment.

Try this: name the fight your business has been losing the longest. Write down what winning it would actually be worth.

If the number is small, or the whole pot is shrinking the way soda is, that's your answer… find a new game.

The cool thing is, knowing when to fold is actually a learnable skill. Check out the book Quit by Annie Duke. She’s a professional poker player, so folding is literally her job.

See you in the snack aisle.

Michael

P.S. David Brown isn’t the only speaker we’ve announced so far. Head to compoundconference.com for all the details.

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