The legendary comment was in response to cynical journalists who had suggested that the company's withdrawal and then reintroduction of Coke's original formula was either a brilliant marketing ploy or an insanely stupid branding error.
Whatever its motivation, the tactic worked, and Coke emerged victorious from the precarious strategic position that Pepsi had cleverly manoeuvred it into. Since then, Coke and its various brand extensions have continually beaten Pepsi into second place in most carbonated beverage markets.
With two decades of hindsight, it is clear that Coke won the battle against Pepsi to be the world's number one cola, but it may well have lost the war to become the more successful corporation. Since the start of 2006, PepsiCo and Coca-Cola are almost identical in overall market capitalisation.
But ask analysts to nominate which is best placed for the future and most will choose PepsiCo. While Coke's share price has fallen by a third in the past five years, PepsiCo's has risen by the same amount.
Coca-Cola's competitive success in the cola wars of the 80s has now become its biggest weakness in the very different markets of the 21st century.
After Coke won the cola wars it continued to focus on carbonated beverages to the extent that 85% of its global profits still come from this category.
In contrast, PepsiCo licked its wounds 20 years ago and opted for a diversification strategy. Today, less than a quarter of its global profits come from its fizzy drinks.
PepsiCo now boasts 17 brands that each generate in excess of $1bn dollars a year globally. The corporation has an enviable portfolio of brands such as Walkers, Tropicana, Aquafina, Gatorade and Quaker that all operate in different categories with equal amounts of success. Coca-Cola may be used to the number-one slot in cola, but in the other growth categories that it competes in, such as sports drinks or bottled water, it finishes a distant second to a PepsiCo brand.
A divide is also emerging in the quality of marketing at the two corporations.
One of the great mysteries of marketing is the apparent halo-effect that Coca-Cola personnel engender within our industry. It is as inevitable as it is annoying to encounter marketers who are introduced with the hushed proclamation that they 'were once at Coke'.
Big deal. Based on recent performance, that should earn the aforementioned marketer a one-way ticket to the photo-copying department. Perhaps the most astonishing feature of 2004's Dasani-gate was Coca-Cola's denials that its inept marketing was in any way responsible for the downfall of the brand.
In contrast, PepsiCo's marketers look like the real thing and PepsiCo is rapidly emerging as a world-class marketing company. Operating multiple brands can confer many synergies and strategic advantages and PepsiCo marketers now excel in key areas such as distribution, pricing and brand management. Chief executive Steve Reinemund is currently maximising PepsiCo's scale, range and diversity by applying the reinvigorated 'power of one' strategy to distribution systems, retailer relationships and consumer promotions.
The greatest challenge of brand management is maintaining a focus on brand equity over time. For this, Coke deserve plaudits. An even bigger challenge, however, is running a company in which multiple brands target different segments in alternative categories. For this, Pepsi earns the accolades and, ultimately, the title 'Victor of the Great Cola War'.
30 SECONDS ON ... PEPSICO
- PepsiCo was founded in 1965 following the merger of Pepsi-Cola and snacks firm Frito-Lay. Tropicana was acquired in 1998 and PepsiCo merged with The Quaker Oats Company, gaining Gatorade in the process, in 2001.
- The company recorded an 11.3% growth in revenue in 2005 and it has more than 157,000 employees. PepsiCo brands are available in nearly 200 countries and generate sales of about $85bn (£49bn).
- Last week, PepsiCo reached an agreement to settle a lawsuit that accused Coke of false advertising for its Powerade Option sports drink. The ads suggested it offered more energy-enhancement benefits than PepsiCo's Gatorade. Coke agreed to pull one ad and modify a second.
- PepsiCo's 'power of one' initiative aims to use the strength of its brands and businesses to create customised solutions for retailers.