PEPSI SUES COKE OVER POWERADE ADS

Claims Comparisons to Gatorade Are Unsubstantiated, Wants Campaign Halted

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CHICAGO (AdAge.com) -- PepsiCo and Coca-Cola Co. are headed to federal court over new advertising for Coke’s Powerade Option that disputes whether less really is more.

Unsubstantiated
PepsiCo’s Stokely-Van Camp unit, the maker of Gatorade, filed the suit yesterday in U.S. district court in Chicago to halt ads for Option that it claims make unsubstantiated comparisons. Pepsi charges that ads for the reduced-calorie Powerade line extension imply it is superior to the full-calorie Gatorade without explaining the differences.

The TV and print campaign via independent Wieden & Kennedy, Portland, Ore., claims that Powerade Option, with its 10 calories for each 8.5-ounce serving, “is better” than Gatorade’s 50 calories per serving. The first 15-second spot in a four-spot series broke March 16 during the NCAA men’s basketball tournament and portrays an Amish “drag” race where one horse-drawn buggy carrying 10 bales of hay speeds past a competing buggy carrying 50 bales of hay. A full-page print ad offering a side-by-side comparison of Powerade Option to PepsiCo’s Gatorade Rain is slated to appear March 31 in USA Today.

A 'literally false claim'
According to the suit, each of Coke’s commercials makes a “literally false claim” of superiority by saying that the brand “provides a performance advantage while containing fewer calories.”

The filing states: “Coca-Cola is telling consumers that Powerade Option’s fewer calories literally make you go faster. However, Coca-Cola cannot possibly substantiate this overall superiority claim.” The Gatorade side argues that the opposite is true because the added calories in Gatorade provide additional energy while the “negligible calories” in Powerade Option “cannot refuel athletes in a similar manner."

PepsiCo claims that its carbohydrate level is optimal for performance and that it has invested millions of dollars in research, including 100 studies in the past 20 years that prove Gatorade’s efficacy.

"This is not an issue of a refreshment beverage but of a functional beverage," said a Gatorade spokeswoman, noting that while calories aren't inherently bad in sports drinks, carbohydrates are necessary for energy.

"They're making the implication that less is more," she said. "In the case of sports drinks more is more. All else being equal, which it is in this case, they're not suggesting they're using more efficient calories or carbohydrates. They are saying they have one fifth as many carbohydrates as Gatorade."

Gatorade, at $3 billion in sales, controls 79% of the “take home” share in the sports drink segment, according to Beverage Digest. While its volume in 2005 grew 18.2%, Gatorade’s share has fallen in recent years as Powerade’s share has grown to 18.6% of the market. Powerade’s volume grew 34% in 2005, outpacing the sports drink category’s 20% gain.

Battle started at Better Business Bureau
The battle actually started last fall when Gatorade took its argument to the National Advertising Division of the Better Business Bureau to block the claim that Powerade Option has 80% fewer calories than Gatorade without disclosing the key differences in the two brands. The NAD sided with Gatorade, saying that Coca-Cola could compare Powerade’s lower-calorie line extension to Gatorade if it made clear that “consumers will not receive the energy replacement benefits provided by Gatorade."

“Our ads tell the truth that Powerade Option has fewer calories than Gatorade, and our advertising fulfills the NAD decision and clearly states that calories equal carbohydrate energy,” Coke spokesman Dan Shafer said. “Our advertising tells the truth and we stand by it.”

While Coke may believe it is complying with the NAD by using the term "carbohydrate energy" along with calories, whether that makes it clear to the average consumer that more calories equates to better performance is unproven. The ultimate question is whether the average consumer knows the definition of carbohydrate energy, a term used in sports medicine and athletics.

Pepsi carries burden of proof
The Coke spokesman said that because the case has been filed in federal court, PepsiCo now has the burden of providing research to prove its allegations that Coke is making a superiority claim.

Most false claim cases boil down to either a literally false claim or an implied false claim, both of which put the burden on the plaintiff to prove, said advertising law experts.

“They have to prove what the ad is communicating,” said Harold P Weinberger, partner at Kramer Levin Naftalis & Frankel, New York. “They say it’s making a literal claim, but that’s not clear. Pepsi has to show that, in fact, Powerade is not better than Gatorade.” However, should the case be viewed only as an implied claim, then Pepsi will have to first show that an implied claims is being made, and then show that it’s false.

“My argument, if I were Coke, is these are not literally false claims,” he added. “If I’m Coke, I’m going to argue that they [PepsiCo] need a survey. I assume they have some proof that they have some testing comparing the two products.”

"We're clearly up to the task of proving the absolute performance differences between Powerade Option and Gatorade," the Gatorade spokeswoman said. "From our perspective there's no comparison in terms of what our formula provides to consumers in an exercise situation and what their product is incapable of providing."

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