COLA WAR MAY GET FEROCIOUS BETWEEN COKE, PEPSI SOFT DRINKS: JUST TO RETAIN CONSTANT SHARE, MARKETERS MUST BE TENACIOUS

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New players are wielding power at the top ranks in beverage marketing, with Charles Frenette in charge at Coca-Cola Co. and Philip Marineau calling the shots at archrival Pepsi-Cola Co.

They replaced Coca-Cola's Sergio Zyman and Pepsi-Cola's Brian Sweete in Advertising Age's Power 50, respectively; they were high-profile executives who resigned within weeks of each other last spring.

The moves were coincidental, but they brought to light the fierceness of the battle to gain market share in the $54 billion soft-drink business.

BREATHE NEW LIFE

While the full impact of these executive changes has yet to be felt, industry observers predict Messrs. Frenette and Marineau, both focused individuals with years of experience in the beverage business, will raise the level of competition.

Both were sought out to breathe new life into flat sales of their flagship cola and diet cola brands. At the same time, they must maintain the recent stellar performance of their non-cola brands, particularly Coca-Cola's Sprite and Pepsi-Cola's Mountain Dew.

COLA WARS ESCALATE

"I think the cola wars are escalating up a notch with these new guys in there. Phil Marineau is very focused on the market share gap between Coke and Pepsi and that it does not widen," says Salomon Bros. beverage analyst Jennifer Solomon. "Charlie Frenette is focused on getting to a 50% share in the U.S. There's no doubt these guys are pretty aggressive."

Coca-Cola lead the beverage industry last year with a 43.9 market share vs. a 30.9 share for second-ranking Pepsi-Cola. Coca-Cola's market share rose 0.8%, while Pepsi's share slightly dipped by 0.1%, according to Beverage Digest.

FOCUS ON LOCAL MARKETING

Mr. Frenette and Mr. Marineau haven't staged major internal shakeups or made sweeping changes in ad strategy, nor have they pledged to do so. Both executives promise to step up local marketing. They also plan to push their advertising agencies to create commercials that can build on national branding messages while

satisfying local needs, where the battle is fought out store by store.

"An infusion of new thinking and new blood is good. I also think continuity is really important," says Jeff Mordos, exec VP-managing director on Pepsi-Cola at agency BBDO Worldwide, New York.

A COKE INSIDER

Mr. Frenette, 45, is a company insider with a strong background in the operations side of selling soft drinks, but little advertising and marketing experience. He most recently was president of the company's Southern Africa division.

He led the company's fountain business-an increasingly important battleground-from 1986 to 1992, and was head of U.S. operations from 1992 to 1996. The son and grandson of upstate New York Coca-Cola bottlers, Mr. Frenette is a well-liked executive with a deep understanding of how to execute programs via bottlers.

WILL COKE CHANGE STRATEGY?

The marketing world has been waiting to see if Mr. Frenette will consolidate Coca-Cola's roster of about two-dozen shops or if he will change the Coca-Cola Classic's long-running "Always" campaign.

While Mr. Frenette has been keeping a low-profile with the media-a company spokesman says he's "still under wraps"-other officials say no big changes are in the works for now.

In fact, under his watch the company launched a new round of TV commercials with the "Always" theme in July.

The marketer now is evaluating results of its summer Coca-Cola Card promotion with an eye toward reviving it next year. The card linked to scores of local marketing partners and included cash prizes via a partnership with MasterCard International.

Mr. Marineau, 52, is a Pepsi-Cola newcomer. He joined the company last December as president-CEO of Pepsi-Cola North America after a 23-year career at Quaker Oats Co., where he is credited with building Gatorade into a strong national brand.

A FIGHT FOR FOUNTAIN SALES

While Mr. Marineau does not hold a marketing title, he is viewed as the power behind U.S. marketing as co-chair of a global Marketing Council formed in the wake of Mr. Sweete's departure last April.

Mr. Marineau has not wasted any time in becoming a cola warrior. Since he joined Pepsi-Cola, the company took its fight for fountain customers to federal court, attacking Coca-Cola for unfair exclusivity.

Also, within hours of long-awaited government approval of a new sweetener, Pepsi-Cola announced it would launch Pepsi One, a new diet cola brand, set to hit stores this month.

"In theory, it's brilliant," notes Ms. Solomon. "We finally have some new news in the diet [cola] category and [Pepsi] is going with it."

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