After 3 Year Lull, Pepsi Wages New Campaign
WSJ reports this morning that Pepsi (NYSE:PEP), after re-organizating its entire marketing division, is set to start a new advertising campaign for its soft-drink products. Recently the company made news in dubious fashion, with Pepsi losing its status as the world’s #2 soft drink to Coca-Cola’s (NYSE:KO) diet coke. The news was quite embarrassing for the guys at Pepsi, but probably less of a surprise given the company’s lackluster marketing efforts in recent years, especially in crucial emerging markets where Coke products have gained a huge lead over their main rival. Some statistics from Beverage Digest are revealing: 51% of soft-drinks consumed globally are Coke products, while 22% are made by Pepsi. Coke has significant leads over Pepsi in China, where 55% of the market is controlled by Coke and 32% by Pepsi; Mexico, where Coke has a 71% share compared to Pepsi’s 14%; and in the U.K., where Coke’s holds 51% market-share to Pepsi’s 15%. PepsiCo Earnings: Processed and Packaged Good Dragged Down Profits>>
Pepsi’s response will come in the form of a new ad campaign, titled “Summer Time is Pepsi Time” which the company will market largely through TV ads (it will up its spending by 30% in that department this year), including an exclusive deal it made with Fox’s (NASDAQ:NWSA) debut British-import program, “The X-Factor.” Simon Cowell (of American Idol fame) will host the show, which Pepsi (NYSE:PEP) paid $60 million dollars to sponsor.
Soft drink sales also underperformed at Pepsi last year, with US sales of Pepsi Cola and Diet Pepsi down 4.8 percent and 5.2 percent respectively. Coke products continued to outperform their rivals in the US, though sales of the company’s beverages dropped off by .5% (Regular Coke) and 1% (Diet Coke) also. With food and beverage makers (these companies included) set to implement at a series of price hikes over the summer, it is unclear how strong an effect Pepsi’s marketing campaign will have in offsetting buyers discouraged by pricier drinks. Coca-Cola Earnings Cheat Sheet: Revenues Bubble Higher As Profits Fizz>>
Other Beverage Companies to Watch: Dr Pepper Snapple Group Inc. (NYSE:DPS), Coca-Cola Enterprises Inc. (NYSE:CCE), Hansen Natural Corporation (NASDAQ:HANS), Reed’s, Inc. (NASDAQ:REED), Cott Corporation (NYSE:COT), National Beverage Corp. (NASDAQ:FIZZ), Jones Soda Co. (NYSE:USA) (NASDAQ:JSDA), Celsius Holdings, Inc. (NASDAQ:CELH), and Fomento Economico Mexicano SAB (NYSE:FMX).