Can Coke's IPG serve PepsiCo?

By Published on .

Let the soft drink shuffle, or struggle, begin.

With the Aug. 2 completion of PepsiCo's Gatorade purchase-and the Quaker Oats Co. parent that tagged along-agency executives and other watchers expect the $94 million account to leave Interpublic Group of Cos. because of angst from Coca-Cola Co., one of Interpublic's top five clients. Coca-Cola and Pepsi-Cola Co. agencies said they have had no discussions with clients about account changes.

Those familiar with Coca-Cola and the agency holding company said Pepsi-Cola's $15 million Tropicana orange juice account and its $10 million Aquafina water assignment likely will move.

The $14 million flavored soft drinks assignment of Cadbury Schweppes' Dr Pepper/Seven Up also could shift.

All the assignments are at Foote, Cone & Belding Worldwide, Chicago-home to Gatorade and its ads with colored sweat and Michael Jordan and Mia Hamm matchups. Interpublic bought FCB's parent, True North Communications, in June.

Cadbury's $9 million Snapple account at Deutsch, New York, also could be vulnerable, though it's slightly less significant to Coca-Cola than is Pepsi. Interpublic bought Deutsch in November. "Nothing has been communicated to us," a Deutsch spokeswoman said.

Interpublic's Pepsi and Cadbury accounts are worth a combined $142 million in U.S. measured media, according to Taylor Nelson Sofres' CMR.

One individual close to Coca-Cola predicted most or all of the work would be gone within a year.

If accounts do shift, there is no consensus among agency watchers where Gatorade, Tropicana and Cadbury would land. Observers said Aquafina probably would go to a Pepsi roster shop-Omnicom Group's BBDO Worldwide or WPP Group's J. Walter Thompson Co., each of which has worked on the brand. A JWT spokesman said he had no information about Pepsi/Coke conflicts. A BBDO spokesman referred a call to Pepsi.

Despite Interpublic's initial claims that competing brands could thrive at different agencies within the world's largest agency holding company, the globe's biggest beverage marketer does not cotton to the idea. "These are real conflicts with people who don't tolerate those kind of conflicts. Coke and Pepsi don't tolerate each other within the same holding company," one agency executive close to Coca-Cola and Interpublic said. Interpublic's McCann-Erickson Worldwide has worked on Coke since 1942, and Interpublic is global "creative consultant" on the brand's $900 million account.

A Coca-Cola spokesman acknowledged it's had "conversations with [Interpublic] about conflicts, about [Interpublic's] representing competing beverages. We think they have our point of view, and we think they will take appropriate action."

Coca-Cola insiders said the company would be happy to see sports drink leader Gatorade depart FCB, which helped build the brand's 83% market share, while Coca-Cola's No. 2 Powerade struggles with an 11% share, according to figures from industry newsletter Beverage Digest. Coca-Cola in May named Wieden & Kennedy, Portland, Ore., as Powerade agency.

People close to Coca-Cola said the company is reluctant to let FCB, whose first Aquafina campaign broke in June, promote the country's No. 1 water while Coke plays catch up with No. 2 Dasani, at Berlin Cameron & Partners, New York.

Equally touchy is Pepsi's Tropicana, the No. 1 refrigerated orange juice in front of Coca-Cola's Minute Maid. Doner, Southfield, Mich., and Bcom3 Group's Leo Burnett Co., Chicago, work on Coca-Cola's orange juice.

Dr Pepper/Seven Up declined to comment, and Snapple couldn't be reached. A Pepsi spokesman said no changes were anticipated and referred calls to Gatorade. A Gatorade spokeswoman referred queries to Pepsi and FCB but said Gatorade is pleased with its agency and that questions about account shifts are premature. "There are no agency changes currently under way for the Gatorade business by any stretch at this juncture," she said.

Calls to Interpublic Chairman-CEO John J. Dooner Jr. were returned by a spokeswoman, who declined to comment.

Decisions may not belong to Pepsi or Gatorade. Coca-Cola already has flexed its conflict muscle. Earlier this year, Interpublic-owned Surge at DraftWorldwide was pressured to give up promo work on Anheuser-Busch Cos.' 180 energy drink when Coca-Cola rolled out rival KMX, according to executives familiar with the brand. Surge now works on KMX.

Coca-Cola is grappling with the rocky launch of McCann-Erickson's Life Tastes Good campaign, massive layoffs at the marketer and continuing rounds of musical chairs in the beverage giant's excutive suite. Interpublic could be reluctant to resign Pepsi-owned products given that Coca-Cola's versions are outside the agency company. Interpublic is said to want stronger assurances from Coca-Cola.

In this article:
Most Popular