Coca-Cola and Pringles eye global brand linkup

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Coca-Cola Co. and Procter & Gamble Co. are believed to be in preliminary discussions to explore global trade, marketing and distribution programs linking Coca-Cola soft drinks and Pringles potato crisps.

"They're talking about some cooperative global marketing initiatives," said an executive close to P&G. "It's not something that will happen tomorrow or next month, but it's being seriously discussed."

`POWER OF TWO'

In looking for a linkup, the marketers are clearly hoping the "power of two" will surpass PepsiCo's new "Power of One" initiatives involving its Pepsi-Cola and Frito-Lay products. The PepsiCo program is expected eventually to involve such developments as Frito-Lay snack distribution through vending machines, side-by-side shelving with soft drinks in supermarkets, and joint promotions and ad campaigns (AA, June 1).

P&G is known to have worked already with Coca-Cola on small joint marketing programs in Ireland, Portugal and Lithuania, according to an international executive familiar with the company.

A P&G spokeswoman confirmed the company has teamed with Coca-Cola for some "local marketing efforts" in Lithuania but said, "beyond that, we can't comment or speculate" on other linkups with the cola giant.

A Coca-Cola spokesman said he was not aware of any partnerships between his company and P&G.

"We're always investigating any number of possibilities including partnerships," he said. "I haven't heard anything about [P&G]."

AGENCIES' ROLES UNCLEAR

It's unclear what role the two marketers' ad agencies would play in such a pairing. Grey Advertising, New York, is Pringles' global shop; Coca-Cola works with 24 agencies including Edge Creative, Los Angeles. At least two agencies-- Leo Burnett USA, Chicago, and D'Arcy Masius Benton & Bowles, New York--are shared by both Coca-Cola and P&G.

Frito-Lay's move to tap the marketing might of Pepsi-Cola has been attributed to its worries over Pringles' growing strength, particularly on the international front.

Frito-Lay is much larger in North America--its sales were $6.96 billion last year compared with what Salomon Smith Barney estimates at $425 million in the U.S. for Pringles. But Pringles is P&G's No. 1 export brand, with sales of $1 billion, according to Salomon Smith Barney analyst Holly Becker, "and growing fast--up more than 30% internationally over the past 12 months."

Pringles accounts for 3% of P&G's total sales; the brand's sales have tripled within a decade.

Frito-Lay's snack sales internationally were $3.4 billion last year.

Industry watchers say a pairing between Coca-Cola and a snack brand makes sense, as a competitive move and marketing ploy.

BIGGER AND BIGGER PARTNERS

"It's very surprising it hasn't happened sooner on a large scale," said Caroline Levy, a beverage analyst with Schroder & Co.

"Everyone seems to think they need to find bigger and bigger partners," said Tom Pirko, president of Bevmark, a consultancy. Mr. Pirko added it makes perfect sense for Coca-Cola to jump into bed with Pringles to combat the Pepsi-Frito linkup. "There is no action without reaction."M

Contributing: Dagmar Mussey.

Copyright June 1998, Crain Communications Inc.

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