PEPSI'S U.S. STRATEGY MAY BACKFIRE GLOBALLY

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Pepsi-Cola Co. is taking its successful U.S. strategy of comparative advertising to the rest of the world. But whether that plan will work globally is another matter.

"Not long ago, Coke outsold Pepsi by a ratio of 3:1 in the U.S. Now we're almost neck-and-neck," said Larry T. McIntosh, Pepsi International's VP-advertising based in Somers, N.Y.

Today, Coke is No. 1 in the U.S. with a 38% market share of colas, he claims, followed by Pepsi's 30%. "We plan to repeat [this success] internationally."

Toward that end, Pepsi is pumping an estimated $80 million to $100 million into an ambitious 30-country campaign including 17 TV commercials.

The comparative spots are hard-hitting. One features an electron microscope examining the submolecular structure of Pepsi and Coke. Initially, there is no difference; both feature a slob asleep in his garden. On closer inspection, the Coke sample reveals a dowdy and grumpy wife mowing the lawn; but Pepsi shows us the very sexy supermodel Cindy Crawford cutting the grass.

Creative or not, making a comparative ad strike global is risky since several countries outlaw comparative ads. Germany, where Pepsi's 7% of the market is far behind Coke's 85%, for example, bans the practice.

"Though our funny comparative commercials have received many awards [at ad festivals] from German jurors, we are sad to say that they are not allowed in Germany," said Arnold Veraart, marketing director of Pepsi Germany in Neu Isenburg. BBDO, Pepsi's agency in Dusseldorf, will pick through the existing pool of spots to find others to run.

Although cleared for the first time in Greece last year, comparative ads are still frowned upon in several European countries, and regulators generally insist that the rival brand remain unnamed.

In the U.K., Pepsi is seeking approval from the Broadcast Advertising Clearance Center to run its ads.

"It seems European audiences are more ready for [comparative advertising] than the regulators," said John Swanhaus, Pepsi International senior VP-sales and marketing.

Pepsi seems to be taking it in stride. "We plan to approach it on a market-by-market basis," said Mr. Swanhaus.

But that approach could slow Pepsi down. In Argentina, for example, Pepsi is still fighting a 1993 injunction granted to Coke to keep Pepsi from airing a comparative campaign (AAI, Dec. 13, '93).

"We're challenging that [the Argentina case]," said Mr. Swanhaus. "We're hoping for a decision this year."

Partly because of local laws, Pepsi isn't using one strategy globally. BBDO Worldwide, New York, is handling Pepsi-Cola, Pepsi Max and 7UP; Ogilvy & Mather Worldwide, Mirinda Orange drink and a new bottled water called Atlantis. But local agency offices are also free to develop campaigns more suitable for their respective markets.

In its bid to become an all-around refreshment giant, Pepsi is spending $2 billion to upgrade existing bottling facilities and build new ones outside North America. That includes $350 million that is being invested in China and another $500 million in Brazil.

"Our aim is to .*.*. get our product in more people's hands in more parts of the world," said another Pepsi executive.

Among Pepsi's other plans: to roll Pepsi Max, which Mr. Swanhaus calls "our certified Coke killer," into 30 new countries on top of the 25 it reached last year. Pepsi Max, with worldwide sales of more than $250 million, will go mainly to Eastern Europe, Asia and Latin America. "We expect it to become a $1 billion brand within the next three to five years," Mr. Swanhaus said.

Pepsi is thinking beyond colas with Atlantis, a processed water test-marketed in Mexico. Unlike most sophisticated designer waters such as Perrier and Evian, the brand will be aimed at developing and Third World countries, "where water purity and safety are major factors," Mr. Swanhaus said.

Pepsi is also working on a new 100-country 7UP campaign for 1995 and plans to extend the Miranda Orange brand to Vietnam, South Africa and Eastern Europe. Dagmar Mussey contributed to this story.

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