Campaign themes have been scuttled, ad spending has been cranked up and new cola products introduced, all to invigorate a segment that has eroded over the past 20 years from 51.7% of the soft-drink market volume to 38.4% in 1998.
The cola backsliding has occurred amid industry growth, albeit slowly in recent years. Industry volume advanced 3% last year, according to newsletter Beverage Digest. Specifically, Coca-Cola Classic mirrored industry growth at 3%, but Pepsi-Cola's grew only 0.6%. The big growth winners were both non-colas: Pepsi's Mountain Dew, up 9.9%, and Coca-Cola's Sprite, up 9%.
COLAS' HEYDAY IS PASSED
"It is safe to say that colas have had their heyday," says David Goldman, Montgomery Security beverage analyst, noting "today's consumer is looking for something different, be it an iced tea or water."
Yet, observers say it's essential for the beverage giants to protect the products that built their businesses and which still generate by far the highest returns.
Pepsi-Cola has reinforced its Pepsi brand with new diet cola Pepsi One, given a $100 million launch last fall, the biggest in Pepsi history.
Pepsi canned its "Generation Next"-themed campaign this year for one tagged "Joy of Cola," targeting families and the youth market. Spots are pitched by a precocious girl with Shirley Temple curls.
"Generation Next" was geared to hip consumers under age 25. That strategy drew negative reviews from Pepsi bottlers for excluding potential drinkers and being a bit too funky. Bottlers applauded its demise engineered by Phil Marineau, president of Pepsi-Cola North America until his sudden resignation this month. His departure to head up Levi Strauss & Co. isn't viewed as management in crisis.
Coca-Cola, though, was embroiled in crisis in June when a contamination scare in Europe caused the biggest product recall in its history. It was widely criticized for its handling of the public health issue. Second quarter worldwide unit volume fell 2%, attributable to the product scare, economic turndown in several key countries and price increases in the U.S.
COKE RESTOKES 'ALWAYS' ADS
Coca-Cola plans to focus more on Coca-Cola Classic this fall by stressing real lives in "Always" spots, running now for six years. A major holiday push for the cola also is planned.
In recent months, Madison Avenue has been awash with rumors that Coca-Cola, which has some two dozen agencies for its soft drinks, will stage a major shakeup in its roster, in part to better focus on its advertising message for Coca-Cola Classic. Its lead agency is Edge Creative, Los Angeles.
Third largest U.S. cola brand, Triarc Beverage Corp.'s RC Cola, is preparing new ads for 2000 to help combat steep sales declines. The brand, the 17th largest