money & economicsWikipedia1898 · North Carolina, USA
Pepsi's founder went bankrupt, and the brand was then rescued by a broker and a candy company president
Pepsi was created by Caleb Bradham, a North Carolina pharmacist who named it Pepsi-Cola in 1898 and registered his recipe in 1903. Sugar rationing during World War I and a volatile sugar market hurt the company badly, and Bradham declared bankruptcy in 1923. The trademark and secret recipe were sold that year, and in 1931 a Wall Street broker, Roy Megargel, bought the brand with Charles Guth, president of the candy maker Loft. Guth used Loft's chemists to reformulate the syrup and pushed Loft's shops to replace Coca-Cola with Pepsi, using company resources to promote it. Loft's shareholders sued in the landmark Guth v. Loft case, which Loft won, and in 1941 Pepsi was absorbed into Loft. In 1965 the company merged with Frito-Lay to become PepsiCo.
The Guth v. Loft ruling is still cited in corporate law on the duty executives owe to their companies, so an early soda dispute helped shape how business leaders are held accountable. It also shows how a drink brand can change hands several times before becoming a global giant.
The name Pepsi refers to pepsin, a digestive enzyme, which Bradham's marketing played on.
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