The Birth of Pepsi-Cola (1893-1931)
In 1893, Caleb Bradham, a pharmacist in New Bern, North Carolina, began serving a carbonated beverage he called "Brad's Drink" at the soda fountain of his drugstore. Bradham marketed the sweet, cola-flavored mixture as a digestive aid, and on August 28, 1898, he renamed it Pepsi-Cola, a name evoking the digestive enzyme pepsin and the kola nut. He incorporated the Pepsi-Cola Company under North Carolina law in 1902, and by 1910 the brand had grown to more than 250 bottlers across roughly two dozen states.
The company's early success did not last. Volatile sugar prices during and after World War I left Bradham overextended, and the original Pepsi-Cola Company went bankrupt in 1923. Its trademark and assets passed to Roy Megargel, who reorganized the business but could not make it profitable; his renamed National Pepsi-Cola operation was itself declared bankrupt in 1931. Pepsi had failed twice within a decade and appeared to be finished.
Revival Under Charles Guth and Growth (1931-1965)
In 1931, Charles G. Guth, president of the New York candy and soda-fountain company Loft, Inc., acquired the rights to the bankrupt Pepsi-Cola through a newly formed Delaware corporation. Guth wanted a cola for Loft's fountains after failing to secure favorable terms from Coca-Cola, and he soon bought out Megargel's interest to take majority control.
Guth's decisive move came during the Great Depression: he began selling Pepsi in a 12-ounce bottle for five cents, the same price at which Coca-Cola sold six ounces. The "twice as much for a nickel" value proposition turned Pepsi into a genuine mass-market competitor. Following a legal battle over ownership, control of the company passed to Loft, and in 1941 Loft merged into the Pepsi-Cola Company. Through the 1940s and 1950s the brand expanded nationally and internationally, repositioning itself over time from a bargain drink into a lifestyle brand aimed at younger consumers.
The 1965 Merger and the Rise of PepsiCo
On June 8, 1965, the Pepsi-Cola Company merged with Frito-Lay, Inc. to form PepsiCo, Inc. Frito-Lay had itself been created in 1961 from the combination of the Frito Company and the H.W. Lay Company, both founded in the early 1930s. The merger, valued at about $1.3 billion, paired Pepsi's beverage business with a national snack-food operation that already ran dozens of manufacturing plants and a large distribution network.
The combination proved strategically durable, giving the new company two complementary product lines that shared retail shelves, distribution channels, and marketing muscle. Snacks such as Fritos, Lay's, Doritos, and Cheetos became as central to PepsiCo's identity as its soft drinks, and the pairing of salty snacks with beverages remains the core logic of the company to this day.
The Cola Wars
From the 1970s onward, PepsiCo and The Coca-Cola Company waged a decades-long marketing rivalry that came to be known as the "cola wars." In 1975, Pepsi launched the Pepsi Challenge, a series of blind taste tests in shopping centers in which many participants preferred Pepsi when brand labels were hidden. The campaign pressured Coca-Cola and helped fuel one of the most famous marketing missteps in history: Coca-Cola's April 1985 introduction of a reformulated "New Coke," which provoked a consumer backlash and led to the return of the original formula as Coca-Cola Classic within months.
Pepsi also leaned heavily on celebrity marketing. In 1983 it signed Michael Jackson and his brothers to a landmark endorsement deal, producing music-video-style commercials timed to the MTV era. The competition drove enormous advertising spending on both sides and cemented Pepsi's positioning as the drink of a younger "new generation."
Restaurants, Refocus, and Major Acquisitions (1977-2001)
During the 1970s and 1980s PepsiCo diversified into restaurants, acquiring Pizza Hut in 1977, Taco Bell in 1978, and Kentucky Fried Chicken (KFC) in 1986. By the 1990s, however, the company chose to refocus on its faster-growing beverage and snack businesses. In 1997 it spun off its restaurant division as an independent, publicly traded company called Tricon Global Restaurants, which operated nearly 30,000 outlets worldwide. Tricon was later renamed Yum! Brands in 2002.
PepsiCo then reshaped its core portfolio through two large deals. In 1998 it acquired the Tropicana juice business from the Seagram Company, adding a leading brand in chilled orange juice. In 2001 it merged with the Quaker Oats Company in a deal worth roughly $13 billion, forming a new Quaker Foods and Beverages division. The chief prize of the Quaker transaction was Gatorade, which gave PepsiCo a dominant position in the fast-growing sports-drink category.
Nooyi, Laguarta, and the Modern Era (2006-2025)
Indra Nooyi became chief executive of PepsiCo in 2006 and chairman in 2007, one of the most prominent women to lead a major American corporation. She guided the company under a strategy she called "Performance with Purpose," which emphasized broadening the portfolio toward healthier options, reducing environmental impact, and investing in people. During her tenure net revenue grew from about $35 billion in 2006 to roughly $63.5 billion in 2017.
Nooyi stepped down as CEO in October 2018 and was succeeded by Ramon Laguarta, a longtime PepsiCo executive who had led its European and global operations. Under Laguarta the company continued to expand and modernize its portfolio, acquiring the home-carbonation company SodaStream in 2018, South Africa's Pioneer Foods in 2020, and Rockstar Energy in 2020, among others. It also pursued healthier and functional products while defending its position in snacks and beverages. By 2025 PepsiCo reported net revenue of roughly $92 billion and employed more than 300,000 people worldwide, operating a portfolio of well over 20 brands each generating more than a billion dollars in annual retail sales.