PEPSI'S GAMBLE HITS FRESHNESS DATING JACKPOT

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Analysts laughed, bottlers complained and even Pepsi-Cola Co. had its doubts. But nearly six months after the company started providing consumers with freshness expiration dates on soft drinks, Pepsi has reason to celebrate.

Many consumers consider freshness dating useful, and they associate it with Pepsi. Nearly all of Pepsi's major competitors felt compelled to also add readable freshness dating to the bottoms of their cans. The tactic stirred up a mature segment, though it's unlikely that freshness dating will have a long-term impact.

Pepsi ignited the change with a test of freshness dating on Diet Pepsi that began in March 1993. That evolved into a national rollout in April, backed by a $25 million marketing campaign.

Today, freshness dates appear on just about all Pepsi-Cola Co. beverage cans and bottles, including juices and iced teas. No additional advertising followed the first wave of support.

The good news for Pepsi is that consumers have noticed freshness dating and think it's a useful feature.

In a survey conducted exclusively for Advertising Age by Market Facts, 61% of those polled thought freshness dating is very important or somewhat important. Half said they recalled which soft drink includes a freshness date on packaging. Of those, 78% named Pepsi and 18.2% named Diet Pepsi. Only 15.5% named Coke.

"The idea turned out to be better than we thought," said Brian Swette, exec VP-marketing at Pepsi-Cola. "There was fear it wouldn't be relevant and that it would have negative operational and trade implications. But it hasn't. It was a bold move, and it's paying off for us."

The Market Facts figures show freshness dating has had the biggest impact on important target groups for soft-drink marketers. Sixty-five percent of 18-to-24-year-olds polled recalled which soft drink includes a freshness date. The percentage lessened with each successive age group, with only 25.4% of those over 65 saying they recalled.

Women-usually the primary grocery shoppers-cared more about freshness dating than men did. Sixty-eight percent of women said freshness dating is very important or somewhat important; 53% of men felt the same.

Market Facts surveyed 1,000 consumers by phone on Aug. 19 to 21. Margin of error was 3 percentage points.

Pepsi has its own figures showing consumer excitement about freshness dating.

"Our research says 80% of consumers are aware of freshness dating. In package goods, that kind of awareness number is staggering," Mr. Swette said. Pepsi also found 91% "like the idea of knowing soft drinks are fresh" and 90% "translate that to great taste."

Perhaps more important, the company points to Information Resources Inc. data showing Diet Pepsi case volume grew by 15%, reaching a 5.7% share of all carbonated soft-drink case volume, in supermarkets for the 12 weeks ended July 10 compared with the year-ago period. Diet colas overall grew 6.5% to a 21.2% share, and Diet Coke grew 6.3% to a 7.1% share.

Of course, there has been more going on with diet colas than freshness dating that could account for the uptick in sales, including packaging innovations and a major rise in advertising from Pepsi-Cola and Coca-Cola.

The growth comes after flat or declining sales for most diet colas last year. Diet Coke grew only 1.7% to $753 million for the 52 weeks ended March 31, Caffeine-Free Diet Coke dropped 1.9% in volume to $359.5 million, Diet Pepsi dropped 2.1% in volume to $570.5 million and Caffeine-Free Diet Pepsi dropped 6.6% to $218.5 million.

"Pepsi made this move [to freshness dating] and then Coke went in to defend itself," said Brian Kardon, director of consultancy Braxton Associates, Boston. "Diets overall got a lot more attention from retailers this summer as a result ... The people who really got hurt were the small guys and private labels who lost shelf space."

Pepsi-Cola's freshness ads from BBDO Worldwide, New York, focused on Diet Pepsi. Freshness is more of an issue for diet soft drinks because aspartame breaks down after 12 to 14 weeks. But the majority in the Market Facts poll named Pepsi as the brand with freshness dating.

Many observers-even some who were originally skeptical about the concept-see Pepsi's move as a marketing coup.

"Pepsi created something out of nothing," Braxton's Mr. Kardon said. "It's to their credit and genius, but it also shows that this is a very mature category. All the action is in New Age beverages, iced teas. There was no news in diets so Pepsi created news."

Even consumers questioned in stores by Ad Age, in a poll separate from the Market Facts survey, saw it as a marketing-driven move though many applauded it.

"I think freshness dating is an advertising concept and not a necessity," said Debra Noble, a sales representative in Memphis, Tenn.

That raises the question of how enduring the freshness message will be for consumers. Pepsi wouldn't discuss future ad plans; competitors said they wouldn't make freshness dating a marketing issue.

"What's the subtitle to your story, `Freshness Dating: What's the Point?"' asked Jim Ball, VP-corporate communications at Dr Pepper/Seven-Up Cos., whose company nevertheless followed Pepsi in putting readable freshness dates on all cans.

A Coca-Cola Co. spokesman said the company has conducted extensive research on the issue and found no evidence of consumer interest in freshness dating.

Despite many Market Facts respondents saying freshness dating is important, only 17% of those polled said they look for an expiration date on soft-drink packaging.

Bottlers, initially concerned that freshness dating would create rotation headaches and an increase in returns, say that hasn't materialized to any great extent.

"Our concerns about people digging through a pile of Pepsi cartons hasn't happened," said Don Bradley, a bottler in Salem, Ore.

Adirondack Beverages is one regional soft-drink marketer that has been using freshness dating since 1990. But most smaller companies can't afford it, said Dick Armstrong, chairman of the company, based in Scotia, N.Y.

"Do we get more returns than we would if we didn't do it? You're darn sure we do," he said. "It sets you up for one more problem. It's a policing job, but we think it's worth it."

Major marketers like Coca-Cola and Pepsi-Cola see such demand and have such fine-tuned distribution networks that fast turnover is virtually guaranteed.

"The [Pepsi-Cola] bottlers were very nervous there'd be additional handling costs, but our research shows it cost only 1 cents to 2 cents per case for Pepsi to do this," Mr. Kardon said. "It was fairly risky, but it didn't cost much to do."

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