COKE READIES RIVAL TO PEPPER: MARKETING, NOT TASTE, WILL BE 'NAME OF GAME'

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Coca-Cola Co. is planning a new soft drink competitor to Cadbury Schweppes' Dr Pepper brand, and will likely test the product next year with a rollout slated for 1999, say executives with knowledge of the strategy.

While there has been talk of a new rival for fast-growing Dr Pepper from the cola giant for some time, the marketing scheme was only recently developed, an executive said.

RESEMBLES SURGE STRATEGY

On the consumer side, the strategy is said to be somewhat similar to the one developed for Coca-Cola's Surge, the new competitor to Pepsi-Cola Co.'s Mountain Dew. Although Coca-Cola had a longtime product similar to Mountain Dew, that brand -- Mello Yello -- had settled in to being a regional competitor only. So the marketer came up with another similar beverage with a new name and a fresh marketing platform directed at the Mountain Dew consumer.

In the latest case, Coca-Cola also has a beverage similar in taste to Dr Pepper: Mr. Pibb, introduced in 1972. But it too has not made it nationally.

"The name of the game here is marketing," the executive said, "not really the taste so much."

Coca-Cola declined to comment on the new product, or on its 1998 plans for Mr. Pibb. Mr. Pibb is distributed in about 40% of the U.S., with its strongest markets in the Southwest, Midwest and Southeast.

Earlier this year, Coca-Cola tried unsuccessfully to convince a number of McDonald's Corp. franchisees to change over their fountain offerings of Dr Pepper to Mr. Pibb.

BIGGEST CHALLENGE

It's on the distributor side where Coca-Cola faces the bigger challenge with a new national competitor to Dr Pepper, not the consumer side.

Currently, more than half of Dr Pepper's distribution is via local Coca-Cola and Pepsi-Cola bottlers, including Coke's largest bottler, Coca-Cola Enterprises. To carry the new beverage, the Coca-Cola bottlers would have to be persuaded to drop the strong-performing Dr Pepper, or the company would have to look to outside bottlers to get distribution.

"Unlike Surge, which could go into any and all Coca-Cola bottlers, because none have [Pepsi-Cola's] Mountain Dew, in the case of a pepper-flavored product you already have Coca-Cola Enterprises full up with Dr Pepper for a certain amount of time," said PaineWebber beverage analyst Emanuel Goldman. "The strategy would have to be quite different than with Surge; it would have to be focusing on other bottlers."

TARGET GROWING FAST

Furthermore, "Dr Pepper is one of the fastest-growing brands in the industry and is an asset to Coke, Pepsi and third-tier bottlers that have it," said John Sicher, editor and publisher of Beverage Digest.

Dr Pepper was the fifth-largest carbonated soft drink in the U.S. last year, with a 5.8% share of the $54 billion market, while Mr. Pibb had a 0.6% share, according to Beverage Digest.

Unknown at this point is what agency would be assigned the new beverage. Surge is handled by Leo Burnett USA, Chicago, and it's said that Coca-Cola is pleased with the agency's work.

Mr. Pibb is handled by the Martin Agency, Richmond, Va. According to Competitive Media Reporting, Coca-Cola spent $907,300 on the brand in measured media last

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