COCA-COLA NOT CONCERNED BY SURGE SUPERMARKET DIP RIVAL TO PEPSI'S MOUNTAIN DEW SHOWS 32% DROP IN JUNE VOLUME

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Coca-Cola Co.'s Surge, a newcomer aimed at tripping up archrival Pepsi-Cola Co.'s strong-performing Mountain Dew, is showing an early sign of weakness in its first six months of national distribution.

Despite a multifaceted summer promotion launched last month for the caffeinated soft drink, volume fell 32% in grocery stores during the four weeks ended June 21, while Mountain Dew volume rose 15%, according to Information Resources Inc. data quoted in a report from investment banker Schroder & Co.

A Coca-Cola spokesman noted that grocery stores are not the key sales outlet for Surge.

CONVENIENCE STORE FOCUS

"It is not something we are overly concerned about because the brand continues to be a strong contributor to our overall business and in the channels where the target audiences are making their soft-drink decision," he said. "We continue to be pleased with Surge's performance."

The spokesman said convenience stores are Surge's main outlet.

NO TIME TO PANIC

"I don't think it's time to panic," said Gary Hemphill, VP-information services for consultancy Beverage Marketing Corp., although "I don't think it's a great sign given that we're in the beginning of the key summer selling season."

A Pepsi-Cola spokesman said Coca-Cola's assault on Mountain Dew has helped focus Pepsi bottlers on their own brand.

"If anything, Surge has psyched our bottlers up," he said.

Coca-Cola's second-quarter earnings statement last week did not include Surge in a list of non-cola brands-including Barq's, Powerade, Fruitopia and Nestea-that contributed to overall U.S. case volume growth of 8%.

The Schroder report said Surge volume decreased 8% in grocery stores for the four weeks ended April 26, and was down 26% for the four weeks ended May 24. Mountain Dew, the fastest-growing brand in the estimated $54 million carbonated soft-drink business, saw volume jump 19% and 15% for the same respective periods, the report said.

Surge, introduced in selected markets in January 1997, expanded to about 90% of the U.S. in January of this year.

`FEEL THE RUSH'

Leo Burnett USA, Chicago, is the agency for Surge, a bright green beverage marketed to 12-to-24-year-olds with edgy commercials carrying the theme, "Feed the rush."

A new promotion is slated for the end of this year or in early 1999.

Coca-Cola has spent $9.3 million on measured media for Surge through April this year, and spent $13.6 million last year, according to Competitive Media Reporting.

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