Driving a tank through the streets of New York City, flamboyant businessman Richard Branson on Tuesday escalated the cola wars with the introduction of a British-made alternative that hopes to challenge market leaders Coca-Cola Co. and PepsiCo Inc. on their home turf.
Virgin Cola Co., which has sold cola in England since 1995 with mixed results, initially will limit U.S. marketing to Los Angeles, New York and a handful of other major cities. But Branson, the colorful chairman of London-based Virgin Group, said the new cola eventually will be rolled out across the country.
"There's really very little competition in the U.S. cola market, so I'm excited by the thought of Virgin Cola taking on Coke and Pepsi," Branson said. "We are not claiming that it will be easy to break century-old drinking habits overnight, but we believe if anyone can, we can."
Virgin Cola's introduction comes less than a week after PepsiCo accused Coca-Cola of trying to freeze it out of the soda fountain segment of the soft-drink market. The suit alleging antitrust violations by Coca-Cola seeks unspecified damages.
Branson's entry will start far behind third-place Dr Pepper/Seven-Up Cos., which has 14.5% of the U.S. soft-drink market. Coke has 43.9% of the $54-billion market, while Pepsi-Cola has a 30.9% share, according to Beverage Digest, a Bedford Hills, N.Y.-based trade publication. No other competitor has more than a 3% market share.
"That army tank Mr. Branson is driving better have a good transmission because he faces a long, uphill fight," said Greg Prince, editor of New York-based Beverage World, another trade magazine. "If he's very lucky, he'll get 1% of the market and that would be doing very good."
Branson has never been shy about bucking conventional wisdom. The entrepreneur who opened a record store in London in 1971 now has 15,000 employees in 22 countries.
Virgin Atlantic Airways Inc., launched in 1984, is now England's No. 2 transatlantic carrier behind British Airways. Virgin Group also operates 14 Virgin Megastores, which sell videos and recorded music. Branson also has business interests ranging from railroads and banking to television programming and the music industry.
With Tuesday's high-profile cola introduction, Branson joined a select list of companies that have tried to grab market share in the cola industry.
"It's been a while since anybody gave it a good shot," Prince said. "I'd guess the last one would have been Jolt Cola, and that's more of a limited novelty line."
