Pepsi fights back against Coke

23 August 2011

NEW YORK: Pepsi, the soft drinks brand, is revamping its advertising and commercial strategy as it seeks to regain ground lost to Coca-Cola.

PepsiCo, the subject of a Euromonitor profile here, is to boost its TV adspend across North America by 30% this year, to complement its high-profile $60m sponsorship of US entertainment talent show, the X Factor.

Recent Pepsi TV spots have also adopted a more playful tone, featuring Santa Claus and polar bears - images typically associated with Coca-Cola.

Massimo d'Amore, CEO, PepsiCo Americas Beverages, told the Atlanta Journal-Constitution: "The way I look at it, these ads have been very successful in triggering consumer dialogue ... We put Pepsi, the brand, back into consumers' vernacular."

Gerry Khermouch, editor of Beverage Business Insights, the trade title, supported such a move, arguing Pepsi's marketing had previously been less cutting edge than Coca-Cola's.

Khermouch said: "As number two, you're the one who takes chances. You're less vested in the status quo, so you go out and do wild things and shake things up. In a way, God intended Pepsi to be the company that shakes things up."

Brad Jakeman, formerly of games firm Activision Blizzard, and Lorraine Hansen, from Kraft, have both joined PepsiCo in senior marketing positions, and, internally, Simon Lowden moved from an international role to focus on the US.

Pepsi's d'Amore said: "We've really brought onto the US battlefield the best team we could have. These are businesses that take time to turn around. We have set ourselves up for success but the real numbers will take some time to show up."

Carlos Laboy, an analyst at Credit Suisse, agreed with this assessment, and suggested PepsiCo had failed to invest sufficiently in its beverage brands for almost a decade.

Laboy said: "It can't just show up with a few new people and flip a switch and make everything better. The change ahead for the soft drink unit will be profound."

Pepsi has fallen behind Diet Coke in terms of volume sales, adding to negative perceptions about the brand.

John Faucher, an analyst at JP Morgan, said: "There is little doubt right now that Pepsi's weak performance in North American beverages is dragging down the results for the entire company."

Data sourced from Atlanta Journal-Constitution; additional content by Warc staff