Pepsi's new look is unveiled. (Pepsi photos)
Redesigned Pepsi packaging reaches stores
Jay Loomis
The Journal News
PepsiCo Inc. is looking to put fizz back in its sluggish soft drink business through a new branding campaign that includes an outreach to younger consumers and new beverage packaging.
The new logo and packages for the flagship Pepsi product are starting to appear on grocery shelves nationally, the company announced yesterday.
The world's second largest soda company based in Purchase also is planning redesigned graphics for its other soft drink brands, including Mountain Dew, Sierra Mist and Diet Pepsi. In addition, the company said that it will soon launch a new advertising campaign.
At an industry conference last month, a top company executive said the goal is to refresh the brand during a time of economic uncertainty.
"There is nothing more important than having some optimism and energy, with consumers that are over-stressed by what is happening (economically) to their household, what is happening to the value of their homes, what is happening to their cash liquidity," said Massimo d'Amore, the chief executive officer of PepsiCo Americas Beverages.
The company is unveiling the new campaign during a challenging time for its beverage business. Consumers are cutting back their spending on items big and small in a weakening economy. The company's third-quarter results reflected the softer economic conditions with sales volumes falling 3 percent in the carbonated beverage category and dropping 5 percent in the noncarbonated drink category.
PepsiCo Inc. said recently that it will eliminate 3,300 jobs globally, including 125 in Westchester County.
"We've lowered our projections for (PepsiCo's) sales growth through 2009-10 given the economic weakness that is expected to impact consumer spending not only in the United States but in many other markets around the world," Morningstar analyst Greggory Warren said in a research report.
The company's new branding initiative seeks to connect with the "Millennial" generation, people who were born between 1980 and 1990. According to a survey released by Pepsi yesterday, four out of five Millennials are optimistic about the future.
"Our new brand identity campaign reflects that optimism like never before - on shelf and in advertising," said Dave Burwick, Pepsi's chief marketing officer.
The back story:
Pepsi Changes Ad Agencies After Decades With BBDO
By SUZANNE VRANICA
One of Madison Avenue's longest and most prolific relationships is coming to an end.
Under pressure to spur sales, PepsiCo is shifting its prestigious U.S. advertising account for Pepsi and Diet Pepsi to Omnicom Group's TBWA/Chiat/Day. The account will be placed in the hands of Lee Clow, chief creative officer TBWA Worldwide, who is known for the successful Apple ads, including the Mac vs. PC dialogues and the iPod dancers.
The move is a blow to the U.S. operations of BBDO, another Omnicom shop, which has handled the Pepsi brand in the U.S. since 1960 -- and in the process created some of the most iconic campaigns in the industry, such as the "Pepsi Challenge" blind taste test that took on rival Coca-Cola. BBDO in 1963 also kicked off the "Pepsi Generation," which positioned Coca-Cola as the older, stale brand and paved the way for the catchy 1980s slogan: "Pepsi. The Choice of a New Generation."
BBDO tapped celebrities to promote the brand, including Cindy Crawford, Ray Charles, Britney Spears, Michael J. Fox, and Michael Jackson. (During the filming of one commercial, Mr. Jackson's hair caught fire.)
The agency shift is part of broader effort at Pepsi to revitalize its soda business as U.S. sales continue to slide. Weak beverage sales were a major factor behind a limp third-quarter profit report from PepsiCo.
Pepsi-Cola volume declined 6.6% in the first nine months of this year, and Diet Pepsi volume sank 8.1%, according to Beverage Digest, an industry publication. Coca-Cola's volume slipped 3.5% in the same period and Diet Coke volume fell 4.5%.
"We decided to appoint TBWA/Chiat/Day to refresh Pepsi's communications across multiple consumer touch points and to reinvigorate Pepsi's legacy of leading-edge advertising," said Dave Burwick, marketing chief for PepsiCo North America Beverages, in a prepared statement.
The relationship between Pepsi and BBDO had become strained over its big cola brands in recent years as BBDO played an increasingly heavy hand in making decisions about Pepsi advertising, says a person familiar with the situation. One of the biggest rough patches came in 2004 when Pepsi was upset over the ouster of BBDO creative chief Ted Sann, the force behind many of Pepsi's best-known ads, say people familiar with the matter.
Over the past few weeks, Pepsi has had both BBDO and TBWA compete for the business by offering new ads and marketing directions for the brands.
BBDO will continue to handle the Pepsi account in other parts of the world such as Asia, Europe and Latin America. The firm also retains U.S. ad duties for several other PepsiCo brands, such as Mountain Dew and AMP Energy.
PepsiCo spent about $130 million on U.S. ads for Pepsi and Diet Pepsi last year, according to TNS Media Intelligence.
Pepsi is working on a set of initiatives to rejuvenate beverage sales in the U.S., including efforts to tap new low- or zero-calorie natural sweeteners. Graphics changes are planned for Pepsi bottles and cans to produce a sleeker look, including altering Pepsi's traditional globe logo to make it look like a smile. PepsiCo tapped Omnicom's Arnell for the logo and package design.
—Betsy McKay contributed to this article.
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