Coca-Cola turned down Pepsi three times — and created its biggest rival

Between 1922 and 1933, Coca-Cola was offered the opportunity to purchase the Pepsi-Cola Company on three separate occasions. Each time, Coca-Cola declined. The reasons were straightforward: Coca-Cola was the dominant cola brand, and Pepsi was a struggling competitor that had gone bankrupt. There was no reason for the market leader to buy the struggling also-ran.

In 1931, Pepsi-Cola went bankrupt for the second time. Charles Guth, the president of Loft Inc., a candy and soda-fountain company, bought the company from Roy Megargel for $10,500. Guth had a personal grudge against Coca-Cola — they had refused to give him a discount on syrup for his soda fountains. He decided to make Pepsi a competitor.

Guth's Loft chemists reformulated the Pepsi syrup. He introduced a 12-ounce bottle sold for the same price as Coca-Cola's 6-ounce bottle — double the cola for a nickel. The value proposition was devastating. During the Great Depression, the 12-ounce bottle was a hit. By 1936, Pepsi was making $2 million in profit and had become the second-largest soda company in America.

Pepsi-Cola grew into a global brand and Coca-Cola's fiercest rival. The Cola Wars of the 1980s, the Pepsi Challenge, and the decades-long battle for market share all trace back to Coca-Cola's decision to say no. A company that could have been bought for $10,500 became a $200 billion competitor.