"Gatorade and Tropicana have chosen to end their relationship with Element 79 Partners," reads a PepsiCo statement confirming the moves. "As we look at the businesses today, we believe Gatorade and Tropicana could benefit from a partnership change. In essence, both world-class brands demand new, creative thinking to fuel their growth. We appreciate Element 79 Partners' stewardship and creative work over the last six years, which have contributed to the success of our brands."
Pepsi spent $245 million in measured media on the Gatorade business housed at Element 79, according to TNS Media Intelligence, and $32 million on Tropicana.
For Gatorade, at least, the shift was apparently prompted by the brand's struggle to maintain its dominant market share against a growing list of challengers. Last year, its share fell by 2.7 percentage points, to 76.3%, while Coke-owned rival Powerade's share rose by 2.6 points to 22.7%.
TBWA and Arnell -- the latter of which represents Pepsi's Sobe brand -- are the latest beneficiaries of Pepsi aligning with holding company Omnicom Group, and switching brands within it.
Element 79 was founded in 2001 primarily to handle PepsiCo accounts. But in February, it lost Gatorade sibling Propel to Omnicom's Goodby, Silverstein & Partners. A month later, Element lost its Tostitos brand to Goodby, and its Lays account went to Omnicom's Juniper Park, a unit of BBDO. Both chip brands are part of PepsiCo's Frito-Lay unit. Another PepsiCo unit, Quaker, remains with Element 79, a Quaker spokeswoman said.
Can it stand alone?
Executives at Element pegged the Propel, Tostitos and Lays losses at 15% of the shop's billings, but Gatorade figures to be an even larger blow, raising questions about Element's viability as a stand-alone agency.
Its other accounts include Supercuts, Harris Bank, Celebrity Cruises and American Family Insurance. It also has a sports unit that does work for Discover Card and other clients.
Calls to Element 79 President Brian Williams and a spokeswoman weren't immediately returned, and creative chief Dennis Ryan declined to comment through his secretary.
Spokespeople at TBWA also declined to comment.
The Gatorade account move was first reported by the Wall Street Journal's website.
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Contributing: Rupal Parekh, Natalie Zmuda