brand commentary

Is Pepsi Refresh Distracting PepsiCo From the Cola Wars?

Posted by Dale Buss on March 17, 2011 03:00 PM

PepsiCo’s social commitment, its crowdsourced Refresh Project, is benefiting the beverage-maker and its brands in many ways. The initiative has boosted its corporate profile and, company executives note, will help boost revenue in the long run. Even in the short-term, there are benefits for the company as well as for the recipients of its $20 million in charitable donations last year and the next $20 million planned for this year.

When the Edelman PR firm recently surveyed Americans to name what “brand or brands come to mind as placing as much or more importance on supporting a good cause as they place on profits,” Pepsi had leapt to No. 1 – over long-time “socially responsible” brands Newman’s Own and Nike, and past rival Coca-Cola, which ranked No. 4.

PepsiCo CEO Indra Nooyi sees Refresh as a model for shared-value promotion by brands. “It’s a matter of, ‘What does this brand stand for in terms of doing something positive in the world?’” she said at a Beverage Digest conference in December. That's all well and good, but as Coca-Cola now holds the top two soft drink sales slots in the US, is PepsiCo taking its eye off the main prize — selling soft drinks?

US sales of Diet Coke have overtaken those of Pepsi-Cola for the first time, making Diet Coke the No. 2 carbonated soft drink in the country behind Coca-Cola. Industry data released today by Beverage Digest magazine confirmed an upset that was already telegraphed by The Wall Street Journal.

Beverage Digest today released its analysis of 2010 sales data, crowning Diet Coke as the successor to Pepsi as the No. 2 soda in the US behind Coca-Cola for the year (and the first time). What's more, as Reuters notes, it marks "the first time a diet soda has ever risen to such prominence."

Reuters adds, "Diet Coke moved into second place even though its volume fell 1% last year, because Pepsi-Cola's volume dropped 4.8%, according to Beverage Digest, which tracks the industry's sales. Shares of Coca-Cola Co and PepsiCo Inc were each up more than 1% on Thursday, in line with the wider stock market."

Of course, we're not saying Pepsi shouldn't continue to do good for local communities, or should cut back or scrap Refresh — just that it needs to show as much creativity, originality and passion for reinvigorating sales — without which it can't support all those good causes.

As for PepsiCo’s next move, the company has already announced its sponsorship of The X Factor, the Simon Cowell TV series that will debut on FOX this fall as a rival to American Idol – of which Coca-Cola is a huge sponsor.

PepsiCo will no doubt be crossing fingers that Cowell still is the lightning rod for attention that he was on Idol. Otherwise, it may be time to Refresh its sales strategy.

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