In May 1990, Fortune Magazine asked: “What happens when two extremely large, highly capable, well-financed corporations fight it out for preeminence in a commodity business like coffee?” The answer: a decade-long “often profitless struggle” between Maxwell House and Folgers, driven by huge media blasts, ineffective new products, and round-after-round of price promotions amid waning demand. The Coffee Wars.

Fast forward to the mid-to-late 00′s. McDonalds was rolling out 11,000 McCafes and Starbucks was finishing a decade of rapid expansion (over 5,000 U.S. stores) by re-awakening the instant category with VIA. When McDonald’s launched Premium Roast in 2006, the media brought back the “Coffee Wars” moniker, with Starbucks and McDonald’s as the primary warriors. Starbucks’ earnings and stock price tumbled, before beginning to claw back in 2009. The New Coffee Wars.

Today, everyone seems to be entering the fray. Subway and Burger King are introducing the Starbucks-owned Seattle’s Best Coffee brand to bolster their breakfast offerings, with BK offering free coffee on Fridays last November to draw greater attention to its revamped breakfast offering. In the past few quarters, Chick-fil-A, Hardees, and Bruegger’s have pushed new offerings to market. 7-Eleven and Dunkin Donuts have long been trying to break through. Will this be the NEW New Coffee Wars?

Most worrisome is the potential for another decade of gloom for coffee profits. Phillip Morris (Maxwell House, part of Kraft General Foods) and Procter & Gamble (Folgers) were two of the largest, most sophisticated, and most enduring CPG companies, yet they fell into the no-profit rut. Starbucks and McDonald’s, the two leading warriors of today, should take care to learn the lessons of the 80′s.

1) An oligopoly doesn’t guarantee profits

From an economic perspective, Maxwell House and Folgers should have enjoyed high profits due to their dominant market positions. But in reality, the constant back-and-forth discounting and couponing left little reward for the victors.

Today, the prospects appear better for McDonald’s. After all, turning penny-profit while setting the price point is in McDonald’s DNA (witness the double cheeseburger wars). Starbucks has always been reticent to give up their price umbrella and the quality signal that comes with it. Still, as traffic pressures mount, price reductions and more “sophisticated” methods of loyalty-based discounts must be carefully tested.

2) Media spending should generate profit, not market share

In 1990, Folgers and Maxwell House each spent nearly $200 million advertising their nearly-profitless coffee. For Maxwell House, that figure was roughly four times the company’s ad spend in 1987, and the gain was a mere point or two of share in the declining revenue segment. If Maxwell executives thought that more media spending could bring back the profitability of the 1970s and ’80s, they were sorely disappointed.

Rather than “betting on the come,” executives needed to rigorously measure the actual incremental impact of media, both in the present and over time. As ad spending is likely to rise in the QSR coffee category, today’s executives should ensure that they understand the value their media drives.

3) Breakthrough innovation often comes from the sidelines

The real winners of the 80′s Coffee Wars were the innovators, not the warriors. The warriors got too caught up in market share to test real innovation. As Nestle said at the time, “If maintaining market share involves jumping off a bridge, I am not jumping off a bridge. But I am not sure the other two guys see it that way. We see them in the water a lot.” Instead, Nestle has built its Nescafe brands into a global powerhouse brand worth $13 billion.

The biggest winner of all wasn’t even mentioned in Fortune’s article: Starbucks only had 50 stores in May 1990. That fact alone ought to keep Starbucks and McDonald’s slightly jittery – and constantly testing the next breakthrough idea.