Tuesday, March 8, 2016

Charles G. Guth and Pepsi Cola Company

In 1902 Caleb Bradham incorporated the Pepsi-Cola Company and started a manufacturing operation.

The company was certified bankrupt on 1923. It wasn't until a successful candy manufacturer, Charles G. Guth, appeared on the scene that the future of Pepsi-Cola was assured.

Guth was president of Loft Incorporated, a large chain of candy stores and soda fountains along the eastern seaboard. At the time Charles Guth became Loft’ president, Guth and his family owned Grace Company, which made syrups for soft drinks in a plant in Baltimore, Maryland. Coca-Cola Company supplied Loft with cola syrup.

Loft operated over 130 soda fountains in the greater New York area. Guth believed that with that kind of volume, Loft deserved better pricing. Coca-Cola believed that Guth had no choice but to buy their syrup, and refused to offer any discount.

He saw Pepsi-Cola as an opportunity to discontinue an unsatisfactory business relationship with the Coca-Cola Company, and at the same time to add an attractive drawing card to Loft's soda fountains.

Guth entered into an agreement with Roy Megargel to acquire the trademark of Pepsi and its formula and form Pepsi-Cola Corporation.

With just handful of bottles in 1934, the number grew to 315 Pepsi-Cola bottlers in 1939.

He later was sued by his partner and claimed that Guth had misused corporate assets and that his Pepsi stock should be handed over to Loft.

Loft filed a suit in a Delaware state court against Guth, Grace and Pepsi, seeking their Pepsi stock and accounting. After nearly three years of legal procedures, the court ruled that Guth, Pepsi-Cola holding belonged to Loft. Loft became a Loft subsidiary and Walter Mack was chosen to be Pepsi’s new President and Guth continuing as general manager.

After five owners and 15 unprofitable years, Pepsi-Cola was once again a thriving national brand.
Charles G. Guth and Pepsi Cola Company

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