But it's doing so bereft of a senior marketing leader. The company's sparkling-brands division has been without a chief marketing officer since Lauren Hobart's departure in January. In fact, executives close to Pepsi bemoan the dearth of creative ideas surrounding the brand, citing historical turnover in the marketing department, a focus on "better for you" products rather than cola and, overall, "flavor-of-the-day marketing." In large part, it's the same accusations that have been leveled at the company for two years.
Though Pepsi did advertise on TV for Refresh Project, the groundbreaking, celeb-studded campaigns that the brand was known for have been conspicuously absent in recent years (see timeline). The closest it's come recently was "Refresh Anthem," created for the 2009 Super Bowl by TBWA/Chiat/Day, which took over creative duties from BBDO in 2008. It featured Black Eyed Peas singer Will.i.am and was set to Bob Dylan's "Forever Young," but it received mixed reviews.
At last month's Consumer Analyst Group of New York conference, Pepsi came out swinging in defense of its strategy. "We have a very good beverage business in the United States," Indra Nooyi said during a presentation at the meeting. "There's been some noise around our position and our performance, so I want to set the record straight. … We have done major work over the past two years to strengthen our brands in North America and we're beginning to see traction on all of these initiatives."
She was referring to October 2008, when PepsiCo announced it would spend $1.2 billion over three years to reinvigorate its beverage brands via a complete packaging, merchandising and marketing overhaul. But with 2011 marking the third year since that announcement, news that the Pepsi brand slid to third place surely came as a psychological blow to employees.
Mr. Jacuzzi, however, said it wasn't viewed as such, pointing out that colas are only one front in a wider war. "We're looking at our total position," he said. "Consumers want a wide range of products. … Today we're fighting a totally different battle on a much bigger battlefield than just colas, though we are completely committed to carbonated soft drinks."
Executives close to the company and industry insiders are mixed on whether Pepsi can turn things around. "Pepsi is going to step up its marketing behind brand Pepsi this year, and I think it's critical that they do so," said Mr. Sicher.
It will be a hard road. Credit Suisse analyst Carlos Laboy recently downgraded PepsiCo's stock, citing the "divergent philosophies" between it and Coca-Cola. PepsiCo, he said, emphasizes innovating to find what the consumer will want next, while Coke focuses on innovation within its core brands. "It took decades to get [Pepsi] to No. 2, and it is risky that PepsiCo cannot avert this slide."
Ms. Nooyi said at CAGNY that she believes PepsiCo has the "best management team with the most amount of experience."
And though Mr. Laboy called some of his observations "intangible" and noted they were at odds with personal experiences, he noted the "defensive tone" of the last two PepsiCo conference calls. "For right or wrong, they left the impression that PepsiCo's culture is turning increasingly insular and abrasive just as Coke's seems to be opening, engaging and enjoying a renaissance of partnership and team principles," he said.