New Campaigns from Coke, Pepsi Reignite Cola Wars
By Martinne Geller
January 21, 2009

NEW YORK - Coca-Cola Co (KO.N) and PepsiCo Inc (PEP.N) are reigniting the long-smoldering "cola wars" with new marketing, hoping to stem a 3-year U.S. sales decline of carbonated drinks.

Coke is launching a global marketing campaign this week for its iconic cola brand, weeks after Pepsi introduced new marketing and overhauled the logos of its soft drinks, including its flagship cola.

"I don't think we've seen this kind of head-to-head competition from the cola giants for probably a decade or so," said John Sicher, publisher of industry newsletter Beverage Digest. "In my view, the cola wars are back on in a very intense and dramatic way."

Coke will air new U.S. commercials on Wednesday during "American Idol" on News Corp's (NWSA.O) Fox network. Others will follow in coming weeks, including during broadcasts of the Super Bowl on NBC, owned by General Electric Co (GE.N), and the Academy Awards on ABC, owned by Walt Disney Co (DIS.N).

Coke's campaign introduces the slogan "Open Happiness" and is its biggest marketing move since March 2006, when it launched its "Coke Side of Life" ads. The campaign includes in-store posters, promotions, outdoor and print advertising as well as digital and music components.

The world's biggest soft-drink maker is hoping the new message will appeal to consumers who are financially and emotionally pressured by the recession.

It aims to help consumers "discover life's simple pleasures," said Coke Chief Marketing Officer Joe Tripodi on Wednesday. "Difficult times call for honesty and simplicity."

Rival PepsiCo launched a new U.S. marketing campaign for Pepsi-Cola on New Year's Eve, and began shipping Pepsi-Cola, Mountain Dew and Sierra Mist beverages with updated graphics and logos in December.


Sicher said the intensified competition could reignite growth for both companies and the U.S. soft drink market as a whole. After decades of growth, U.S. carbonated soft drink sales have fallen for the past three years as some consumers opt for bottled teas, coffees, juices or energy drinks, and many others cut back altogether.

According to Beverage Digest, sales of Coca-Cola fell 4.4 percent in the first nine months of 2008, while Pepsi-Cola sales fell 6.6 percent. Category sales fell 4.8 percent.

Beverage Digest tracks sales at convenience, grocery and drug stores but does not include sales from Wal-Mart Stores Inc (WMT.N).

Pepsi CEO Indra Nooyi said in October that in a normal economy, the revamp of Pepsi's soft drinks' marketing could help stem the sales decline and slowly bring trends "back to flat."

Coca-Cola North America's chief marketing officer, Katie Bayne, said on Wednesday she shared a similar hope, but declined to be specific since Coke has not yet reported earnings for its fourth quarter, which began on Sept. 27.

"Our plan is to grow. This is a growth business and there's huge growth available in sparkling (beverages)," Bayne said.

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