Can Pepsi's Big Marketing Shake-up Bring Back Fizz to Its Beverage Brands?

Drink Giant Taps Jakeman, Lowden, One Other Exec as Beraud Heads for the Exit

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After several years of turmoil and turnover -- and against recent news that Diet Coke has nudged past Pepsi to become the second-largest U.S. soft-drink brand -- PepsiCo is taking another shot at getting its marketing ranks right.

The company is moving to restructure its beverage marketers, adding three new positions and carving up the chief marketing officer-PepsiCo Beverages America position held by Jill Beraud, who is leaving, reported last week. The news triggered a fresh round of speculation over whether the moves are a step in the right direction or a shuffle that will further confuse the rank-and-file in beverage marketing, some of whom will soon be face-to-face with their third boss in four years.

Executives close to the company are baffled as to how the new structure will operate, questioning who, exactly, brand teams will report to. One executive close to the company speculated that , for example, under the new structure, brand Pepsi's marketing team could be split up, with some reporting to Brad Jakeman, who is taking on the role of head marketer for Pepsi trademark globally, and some reporting to Simon Lowden, who is moving into a U.S. role from Pepsi International.

Mr. Jakeman, widely viewed as one of the few rock-star marketers in the business, was previously exec VP-CMO at gaming giant Activision Blizzard and, according to executives familiar with the matter, will take on the big guns globally: Pepsi, Diet Pepsi and Pepsi Max, though he will also be working on other soft-drinks, such as Mtn Dew and Sierra Mist.

Insider Mr. Lowden, who currently has a chief marketer role for Pepsi International, is said to be assuming the role of CMO for the U.S. beverages business. A third executive, expected to hail from outside PepsiCo, is believed to be slotted to become global chief marketer for beverage brands, not including carbonated soft drinks, Gatorade or Tropicana. That would leave brands such as SoBe, Aquafina and Propel.

Pepsi is being tight-lipped about its plans but executives close to the company said that whispers have been heard in the halls of the Purchase, N.Y., headquarters. Nothing is expected to be announced until this week. A spokesman declined to comment.

Carlos Laboy, an analyst with Credit Suisse who has been critical of PepsiCo in the past, recently upgraded the stock, reflecting a newly optimistic view of PepsiCo's turnaround efforts.

"This is only part of the noise you're going to get over the next couple of months," Mr. Laboy said. "Nineteen of the top marketers at Gatorade and Tropicana weren't there three years ago. Massimo [d'Amore, CEO-PepsiCo Beverages America] is done with the marketing overhaul of those two organizations, for the most part." Now, he said, Mr. d'Amore "needs to overhaul the New York marketing organizations. The changes in the New York marketing organizations haven't been as profound or as robust as they need to be. We expect there to be a lot more change and turnover. And we view that as a positive."

The restructuring also positions PepsiCo to embrace more of a global approach. Pepsi has a significantly smaller worldwide presence than its rival. According to Beverage Digest, one in two carbonated soft drinks consumed around the world is a Coke brand (it has a 51% global share) while fewer than one in four is a Pepsi brand (a 22 % share). And in many countries, Coke dwarfs Pepsi: 55% of the market in China is controlled by Coke and 32% by Pepsi; Coke has a 71% share in Mexico compared to Pepsi's 14% share; and in the U.K., Coke's share is 51%, while Pepsi's is just 15%.

"It's not a bad time to look at the structure, because they have a little bit of a tailwind," said John Faucher, an analyst with JP Morgan, noting that various beverage categories, in general, are recovering. "But I'm a little skeptical that a consistent message will work for these brands around the globe."

The U.S. is Pepsi's biggest market; however, it's been losing ground here. In 2010, Pepsi's share of the soft-drink market fell 0.4%, allowing Diet Coke to push past it as the second-biggest soft-drink brand in the U.S. Diet Pepsi saw its share tumble 0.3% last year, according to Beverage Digest.

Last year Pepsi's big focus was on Refresh Project; this year the brand's biggest bet is on a $60 million "X Factor" sponsorship and integration.

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