Coke v. Pepsi: Return to war

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The cola wars are back.

Though the cola conflict never actually ended, Coca-Cola Co. and PepsiCo's Pepsi-Cola Co. recently have engaged in sort of a detente, training their guns instead on non-carbonated, flavored, water, isotonic and alternative beverages. Now, with Coca-Cola Classic's first campaign in more than a year in production and Pepsi's expected shift from "Joy of Pepsi," the beverage behemoths are set to square off with support that could top $500 million for their colas and flavored flankers.

Colas represent a declining 60% of all carbonated soft drinks, according to Beverage Digest. With the U.S. cola market worth about $30 billion annually and each share point encompassing millions of dollars, marketers are using innovation-Diet Coke with Lemon, Vanilla Coke, Diet Vanilla Coke, Pepsi Twist, Diet Pepsi Twist-to re-ignite a category launched in the shadows of the Civil War.

"The cola wars are back, but you may not recognize them," said one longtime beverage agency executive. "Coke and Pepsi are going to be spending [at unprecedented levels] against their core because everything requires a healthy core."

A recent lack of marketing support, however, does not seem to have unduly hurt the cola flagships. While Coke Classic ad dollars plunged 42% in the first half of this year, its volume dipped only 0.3%, according to Beverage Digest. Meanwhile, Pepsi-Cola's ad dollars dropped 30% and volume slid 1.3%.

Steve Hutcherson, Coca-Cola's VP-brand business unit manager overseeing sugared colas in North America, said unmeasured media offset the measured media drop. He attributed Coca-Cola's showing to new products, repackaging and new cartons that fit more easily into refrigerators.

name on the door

Pepsi declined to comment other than to say, "Pepsi-Cola is the name on the door here, so there's no question it will be an important part of our upcoming marketing plans." The marketer is expected to move past "Joy of Pepsi" in the second half of next year.

After almost two years with Britney Spears and almost four with the "Joy of Cola" and "Joy of Pepsi" campaigns, the blue team will use so-called everyday people and less of Britney in 2003 ads, according to marketers and agency executives familiar with Pepsi. Summer promotion plans are in the works for a tie-in with a reality show as well as with Universal Studios' "The Hulk." A major music promotion with Sony Music Entertainment starts in May as part of a Pepsi initiative toward live events. Omnicom Group's BBDO Worldwide, New York, is Pepsi's agency.

barrage of reality

Having renewed its focus on colas, Coca-Cola will unleash a barrage of spots and goose spending for Classic's "Real" campaign at the expense of sibling brands, according to several people familiar with the soft-drink giant. Diet Coke, for example, is in line for only about $10 million to $12 million in advertising-compared with $15 million the first eight months of this year, according to Taylor Nelson Sofres' CMR. Powerade, Dasani and other brands likely will have to make do with less as well, according to two people with knowledge of the plans.

Mr. Hutcherson would say only that colas would continue to receive the bulk of the company's spending. However, the unnamed beverage agency executive said the stakes are higher than ever: "Half a billion dollars will be spent between [brands] Coke and Pepsi ... and that doesn't include the bottlers or promotions."

Though a "Real" launch date hasn't been pinned down, it likely would tie into the company's new $500 million, multi-year NCAA sponsorship and the associated March Madness basketball playoffs. The campaign, from WPP Group's Berlin Cameron/ Red Cell, New York, will depict "real situations" and use magician David Blaine and other celebrities.

Coke has laid low since pulling "Life Tastes Good" after the September 2001 terrorist attacks, though it managed to receive $67 million from January through August 2002, with its winter Olympic sponsorship and two ads with quick cuts of summer themes and Coke icons. The brand last year received $165.4 million in measured media, compared with $201.8 million in 2000, according to CMR.

contributing: wayne friedman, kate macarthur, rich thomaselli

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