BrandIndex provides Coke & Pepsi consumer perception data & analysis for Advertising Age

Happy Days Not Here Yet for Coke, Pepsi

Brands Lose Share, Volume, but Optimistic Campaigns Still Could Pay Off

By Natalie Zmuda

NEW YORK ( -- Coke and Pepsi have funneled millions into upbeat marketing campaigns in the first quarter, but the results aren't worth smiling about just yet.

Both brands lost market share and volume during the quarter, according to Beverage Digest, while Dr Pepper, Mtn Dew and private-label brands picked up share. Coke dropped about 1% market share, while Pepsi forfeited about half that. Both companies as a whole also lost both share and volume, though Coca-Cola Co.'s declines were steeper than PepsiCo's. Beverage Digest data include convenience stores, drug stores, supermarkets and mass merchants; they do not include Walmart.

It's not the outcome executives at both companies were hoping for, but it's not surprising, given the economy and myriad other factors. And those major marketing pushes -- "Open Happiness" for Coca-Cola and "Refresh Everything" for PepsiCo -- have created plenty of buzz that could pay off in increased share later.

Both Pepsi and Coke saw increased buzz during the first three months of the year, according to YouGovPolimetrix's BrandIndex polling. "From a buzz perspective, both brands scored very favorably, but Coke has a distinct advantage," said Ted Marzilli, senior VP-global managing director, BrandIndex.

Pepsi's buzz scores declined with the 18-to-34-year-old crowd throughout January, which coincided with the brand's inaugural marketing push. Only after the Super Bowl in February did buzz with that group rebound and briefly close the gap with Coke. Pepsi's feel-good marketing also appears to be resonating better with women across age groups, according to the data.

Coke's buzz scores, meanwhile, were relatively steady throughout the first three months of the year, tracking slightly better with younger women and older men. The launch of its campaign in the latter part of January coincided with some slight increases in buzz across a variety of demographics.

"Both companies are doing a good job marketing their brands, but the economy is basically holding back performance a bit," said John Sicher, editor and publisher of Beverage Digest. "Industry volume is probably going to be reset at a somewhat lower level coming out of the recession. The question is: Can the big carbonated brands begin to grow again from a reset lower level?"

'Summer is so important'
The revitalized cola wars, which have been heating up since the beginning of the year, are widely expected to bring new life to the category, even if the first quarter was lackluster. "We're not going to know [more] until we get into and through the summer," Mr. Sicher said. "The summer is so important for the beverage business, and the first quarter is a relatively low-volume quarter."

PepsiCo and Coca-Cola echoed that sentiment, both saying it's early in the lives of their campaigns, and they are pleased with initial results.

Nicole Bradley, a PepsiCo spokeswoman, said the company is seeing positive results from its overhaul of its carbonated-soft-drink portfolio. "The Pepsi 'Refresh Everything' campaign across TV, print, out of home and on the web has been very popular with consumers since its launch on New Year's Eve," she said. "In addition, we're also starting to see the volume impact of our refreshed approach." She pointed to data showing that PepsiCo's carbonated beverages are outperforming Coca-Cola's.

Coca-Cola, however, contends it is outperforming the industry. The company said it gained volume share in North America across retail categories -- including outlets not measured by Beverage Digest, such as food service -- for the fifth-consecutive quarter. During the company's first-quarter earnings call, CEO Muhtar Kent said, "The campaign is successfully connecting the brand with key target audiences -- teens and moms -- driving recruitment and retention." A spokeswoman said the company expects to be able to measure the full impact of its campaign by the end of the year.