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A cola war doesn't have to be accompanied by the fanfare tied to old taste tests. It can be an internecine affair, like the one Pepsi-Cola Co. and Coca-Cola Co. are waging.

These two were the only corporate marketers besides private label (largely Cott Corp.) to gain in market share last year, growing to 43.1% of the soft-drink market for Coca-Cola and 31% for Pepsi-Cola, according to Beverage Digest.


Between them, they accounted for two-thirds of $669.4 million spent in 1996 (up 26%) in media on all regular and diet carbonated and non-carbonated drinks, according to Competitive Media Reporting.

In those same category segments, Coca-Cola laid down $287.1 million in media, up 57%, and Pepsi-Cola, $148.9 million, down 11%, although Pepsi more than compensated for the lower media tally with its heaviest promotion campaign ever.

Lesser rivals are being squeezed. Cadbury Schweppes' 7UP just repositioned itself, including a slight reformulation that comes closer to the taste of Coca-Cola's Sprite, a brand that has been stealing much of 7UP's sparkle.

The 7UP brand has lost distribution from several key Coca-Cola bottlers that switched to Sprite. Bottling and distribution channels are dominated by Coca-Cola and Pepsi-Cola.

While the new age, alternative beverages have forced both companies to divert some energy, the moves resemble skirmishes. Their participation in these emerging categories make it expensive for others to gain footing, thereby protecting their core brands.


"We never felt the new-age category was dynamic," Sergio Zyman, Coca-Cola Co. Senior VP-Chief Marketing Officer, told Advertising Age earlier this year, adding: "We felt if the category is going to go, we have to participate, but if it grows it's going to be very slow."

Surge and Citra are Coca-Cola carbonated alternatives, and Josta is Pepsi-Cola's line. PowerAde and All Sports are the giant beverage companies' respective sports drinks.

"Let's face it, the cola war made both companies rich," says Tom Pirko, president of Bevmark, an industry consultancy. "It [the taste-test war] kept up a fabulous supply at low prices."

Bolstered by the $132 million it spent behind Coke Classic in 1996-much of that during the Summer Olympics-Coke shifted this year to a seasonal marketing calendar with themed promotional events. This winter it was "Get caught red-handed," and the summer, "Coca-Cola incredible summer," each costing about $15 million.

Coca-Cola has said it wants 50% of the U.S. soft drink market by 2001. Along with heavy promotional spending, the "Always Coca-Cola" campaign touting Coke Classic is bearing that load.


Coke Classic held a 20.8% market share in 1996, same as '95, while Pepsi dropped 0.1 points to 14.9% of market. Sprite gained 0.7 points to 5.8% of market, same share as Cadbury's Dr Pepper and Pepsi-Cola's Mountain Dew.

The diet side may be the company's best offense against alternative drinks with campaigns from both companies aimed at baby boomers, the population segment that is drifting to alternative drinks.

Coca-Cola in May broke a $40 million ad campaign for Diet Coke, scrapping the "Just for the taste of it" theme for one of lifestyle. Coke boosted its support of Diet Coke to more than $60 million in 1996 vs. $21.5 million in 1995.


PepsiCo during summer '97 lavished an estimated $50 million-plus on its second annual "Pepsi Stuff" promotion, enlisting top professional athletes.

Last summer's campaign, which gave away $125 million in merchandise with proof-of-purchase redemptions, helped maintain Pepsi's share when Coca-Cola turned on the media spigot during the Olympics.

PepsiCo this October will spin off its Pizza Hut, KFC and Taco Bell restaurants, freeing the company to pursue all restaurant fountain business.

"When they still owned restaurants, competitors didn't want to give PepsiCo an additional edge by selling Pepsi soft drinks. Now, Pepsi can give Coca-Cola more competition on another front," says Gary Hemphill, VP-information services, Beverage Marketing Corp.

PepsiCo's Roger Enrico, chairman-CEO, also has called for more joint marketing efforts between Pepsi-Cola and Frito-Lay brands starting with "chips in a soda can"-Fritos and Doritos chips in 12-ounce aluminum cans carried in Pepsi vending

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