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Craig weatherup, 52, chairman-CEO of Pepsi-Cola Co., began his career with General Foods as a financial analyst directly after college in 1968 -- "day one out of college," he emphasizes. After a brief tour in Kankakee, Ill., where he decided that he wanted to run a business by the time he was 40, he moved to General Foods' corporate headquarters in New York to do brand marketing for Raisin Bran, Log Cabin and other products.


In the mid-'70s a couple of former General Foods executives who had moved over to Pepsi began making overtures to Mr. Weatherup. Finally, after an interview with PepsiCo's then-CEO, Donald Kendall, he joined Pepsi at the age of 29 and began the climb that resulted in the presidency in 1988, three months ahead of the schedule he had set for himself back in Kankakee. He was named Pepsi-Cola Co. chairman in 1996.

Mr. Weatherup presides over a considerable physical empire in Somers, N.Y. The Pepsi division of PepsiCo occupies a single office complex built into the hilly countryside just west of Connecticut. The view from the ninth floor looks out across a vast pastoral campus that includes well-trimmed landscapes, a lake and acres of employee parking.

Among Mr. Weatherup's responsibilities is advertising, which he feels little need to micro-manage. "It depends on the moment, of course," he says, assessing the time he devotes to such matters. "It goes from 1% on a day-to-day basis to 100% a couple of times a year. Maybe 5% or 10% over a year


"In terms of the agency per se and the creative process, I get involved at the storyboard stage and go through all the boards and agree on what we're going to shoot. And then the next step would be in the rough edit stage. A big part of what BBDO does extraordinarily well is editing copy.

"My philosophy is that if our copy is going to get applauded or panned, I guess I'd like to feel that I was enough a part of it -- that I can take either the applause or the slings and arrows. But I don't want to just have it arrive."


What really concerns Mr. Weatherup now is pumping life into a corporate share of the U.S. soft drink market that's been flat for a decade. Today it runs around 31% against 44% for Coke, numbers he knows well but takes little pleasure from. Even in historical context the news is not good. "If you took the last 10 years," he says candidly, "Pepsi's share is identical to within two-tenths of what it was a decade ago. Yet, Coke has grown 4.3 points against Pepsi in that time. And of that 4.3-point gain, 4.2 is the fountain business.

"We've lost some fountain share and gained some packaged share. But Coke has gained a tremendous amount of fountain share. That's why they grow so much faster than the rest of the business. "I'd say our entry into the fountain business is absolutely mission critical," he emphasizes.

(To that end, in May, Pepsi filed suit in Federal Court, accusing Coca-Cola of conspiring to lock Pepsi out of institutional sales by threatening to withhold sales of Coke products to any food-service distributors that agree to handle Pepsi products as well.)


What grinds on Mr. Weatherup and his boss, Roger Enrico, PepsiCo CEO, is that, according to company numbers, preference for Pepsi is not just even, but better than even, against Coke.

"If you want to have the ultimate test of brand equity," Mr. Weatherup says, "just walk into any convenience store in America, go to the cold vaults -- the doors in the back -- one Coke, one Pepsi, same package, same size, same price, both chilled. That is the brand equity test. And we dominate Coca-Cola in that choice."


If this is true, then why are fountain buyers not influenced by this? Three reasons, says Mr. Weatherup.

"First, back in our history we went bankrupt twice and didn't really emerge until the mid-'30s. Up until 1950 basically we were a non-factor in the U.S. Even during World War II we were outsold 8 to 1 in . . . stores where we now have leadership. So for the first 30 years up to the '70s, the role of the company was to get to a level playing field in food stores. Coke had basically 100% of the fountain market for several decades.


"Then once fast food became a big thing, especially in the '60s and '70s, again Coke had this enormous lead. So we got into the restaurant business with Pizza Hut, Taco Bell and Kentucky Fried Chicken. And I'd say Coke did a very good job of selling the notion of commitment vs. competition. This was not so much a matter of logic as emotion.


"Logic would say if the No. 1-selling cold item in the U.S. is the 20 oz. Mountain Dew and the second-best seller is Pepsi, you would want the two most popular drinks on your menu. That sounds logical. But the reality is that if you're running a Burger King, and a Pizza Hut or KFC opens across the street advertising that burgers are boring, you get emotional. You don't care if your customer prefers Pepsi products. You're not about to buy from your competitor's parent company. Emotion overruns logic.

"And three, of course, is the fact that we never had the distribution

rights that Coke has on fountain markets, which have been the fastest growing part of the category since 1990."


Last October PepsiCo spun off its fast food division, which is now an independent and publicly traded company called Tricon Global Restaurants. Freed of this dilemma (while at the same time signing up nearly all their former units), Mr. Weatherup believes the way is at least partially cleared for a Pepsi charge into the restaurant market. "The fact that we no longer have restaurants," he says, "is a sea change in our ability to compete in the fountain business."

But there are still obstacles. If restaurants feel more free to buy syrup from Pepsi bottlers, the fact remains that most prefer to deal with distributors, who can provide a one-stop source for everything from condiments to straws. And as long as distributors fear being cut off by Coca-Cola if they take on Pepsi, as PepsiCo claims in its suit, Pepsi will still remain behind.


The real sea change, if it comes, will probably be through the courts. To what extent is PepsiCo using advertising to help create a favorable climate of opinion for its allegations?

"We've discussed that a host of times," Mr. Weatherup says. "And we've made the decision that it really isn't something to win or argue in the court of public opinion. The audience here is the restaurant owners and the food service distributors, and the issue is their right to make their own soft drink decisions."

This group could be lobbied through the trade press. But for now, Mr. Weatherup says, Pepsi has not done this. As for the future, "we may," he says.


As for advertising's role in the larger cause of advancing fountain sales, Mr. Weatherup says it is part of the picture. "What we sell to these restaurant operators is a compelling set of trademarks -- Pepsi, Diet Pepsi and Mountain Dew. Just to give you a number, our past two-week usage for brand Pepsi is 80 million people. Every two weeks, 80 million consumers are having a Pepsi. We have this phenomenal trademark that isn't available in a huge number of locations. So our advertising is tremendously important. But if you can't physically get there or tactically be a viable option to the competition, it doesn't do you much good."

Two years ago Pepsi set up a fountain sales division under Vince Gennaro, who oversees a full marketing group, a product development budget, and a package development budget that came up with the "Twist-'N-Go" cup now in test. Advertising, however, remains part of the larger trade budget.

Though Pepsi has added a formidable array of drinks and flavors to its roster over the decades, cola remains the heart of the category, says Mr. Weatherup, "and as far as I can tell, always will be. People will go grazing around trying other things, but at the end of the day they come back to colas and the other basics like orange and lemon-lime."

Mr. Weatherup says that he is a man who works by planning, by setting goals, and by marking progress against certain checkpoints along the way. He has found such timetables useful on the way up. Once at the top, however, timetables become less reliable in predicting the way out.


"My goal was to retire at 45," he says with no audible hint of regret, "so I'm behind. I've certainly been eminently challenged in the last two years since I picked up the international business, and we've had to deal with getting our U.S. business back on track. I would never leave unless I thought we were on top. And that's not going to happen tomorrow. At this point, I don't have any timetable."

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