Soft drink marketing gets makeover amid recession
NEW YORK - January 31, 2009 -- Feeling bad about the economy? Indulge a little, have a soda.
Marketers at Coca-Cola Co. and PepsiCo Inc. are counting on that sentiment to appeal to consumers overwhelmed with a drumbeat of bad economic news.
"What people want to do is pause and refresh," said Coca-Cola chief marketing officer Joe Tripodi.
Pepsi, the world's second-largest soft drink maker, launched a new marketing campaign at the beginning of the year, while No. 1 Coke launched its campaign three weeks later.
Soda makers, who have seen their highest-profile products lose ground to energy drinks and pricey bottled water in recent years, are turning away from the lifestyle marketing that has dominated the soda wars. Now, they hope to draw customers back to the old favorites with a simple lure: they're cheaper - or at least a better value.
Coke's campaign includes 16-ounce plastic bottles of Coke, Coke Zero, Diet Coke, Sprite and Fanta for 99 cents. The new size could draw people looking for a bargain, in that a 20-ounce bottle costs $1.25 to $1.50.
An ad campaign called "Open Happiness" and tied to the "Coke Side of Life" ads launched on "American Idol" last week. One spot features two students sitting across from each other in a library and flirting by drawing competing images of Coke bottles and on their arms.
"A lot of people have left the category," Beverage Digest editor John Sicher said last week. "Also, a lot of young people have not entered the category, so these ads may help Coke both recruit new young consumers and re-recruit some lapsed ones." Coke plans to run three ads during Sunday's broadcast of the Super Bowl football championship on NBC.
PepsiCo spokeswoman Nicole Bradley said PepsiCo would air five to six minutes of commercials for bottled drinks during the Super Bowl, making it the biggest advertiser for the game. The ads will feature Pepsi, Gatorade, PepsiMax and SoBe Life Water. With the launch of its new logo, the company also has increased its number of drink ads on billboards and in other public places such as subway stations, bus stops and on tops of taxis.
In recent years, as U.S. soda sales fell steadily - including 2.5 percent in the third quarter last year at PepsiCo, while Coke doesn't break out soft drink performance - the two turned to other bottled drinks for growth.
PepsiCo refocused its drinks portfolio around bottled Lipton teas and Starbucks coffees, its Aquafina bottled water, Izze sparkling juice drinks and others.
Coke made the biggest drinks acquisition in industry history in June 2007 when it bought Glaceau's VitaminWater for $4.1 billion. Though its products contain plenty of sugar, the brand had attracted health-conscious consumers with drink names such as Power-C, Defense, Endurance, Rescue and Multi-V.
But CEO Muhtar Kent said last fall that soft drinks are the "oxygen of our industry."
The chief executives of both soda makers indicated they were refocusing on soft drinks last fall as consumers felt the weight of a recession but it had not yet been officially declared.
PepsiCo's push is "complementary" with the trend of shoppers trading down, the company's North American beverages chief Massimo D'Amore said Tuesday. He declined to say the company was appealing to consumers' pocketbooks.
"We will not communicate on price," he said in an interview. "Value to consumers is much broader than price. It's not the primary focus of our marketing."
D'Amore told reporters gathered Tuesday to hear details of the company's Super Bowl plans that Pepsi's drink portfolio is the "exact ammunition" it needs to win in the current climate. Chief Executive Indra Nooyi has said the company - which also owns the Frito-Lay, Tropicana, Gatorade and Quaker brands - aims to slow the decline of U.S. soda sales.
Both companies are grappling with how to hold on to consumers that have grown wary of the high-fructose corn syrup that is used in a wide variety of bottled drinks, from soft drinks to bottled teas and energy drinks.
David Schardt, senior nutritionist at the nonprofit Center for Science in the Public Interest, said the companies' latest campaigns are not going to improve public health if sales of sugar-based sodas do rebound.
"We already drink too many of our calories," he said.
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